While Bitcoin bulls like Tom Lee and Brian Kelly remain optimistic about the prospects of the top-ranked cryptocurrency, one technical indicator reveals that there might be no end in sight to the current sideways price action.
Long-Term Downward Bitcoin Price Action
According to Bloomberg, DVAN long-term trend lines paint a picture of a continued downward price action for Bitcoin. Currently, the baseline hovers above the algorithm line for BTC. This trend suggests an extended dip in the price of the asset.
For the upward price trajectories that many BTC enthusiasts continue to espouse to come to fruition, then a trend reversal needs to happen. The algorithm line moving above the baseline could signal a price bounce that’ll get traders buying more of the asset.
Whether such an occurrence would lead to a massive price rally remains to be seen. The three occasions when the algorithm line moved above the baseline, BTC didn’t enjoy any prolonged price gain.
Continued Sideways Trading
For now, Bitcoin continues to maintain its sideways trading that has characterized its price action since Q2 2018. On Monday, (October 29, 2018), BTC dropped almost three percent in a matter of hours, falling to $6,309.
This extended sideways trading means a significant contraction in Bitcoin’s volatility. Presently, BTC is at its lowest volatility level since 2016. With decreasing trading volume as retail traders appear “fatigued,” some observers say only a significant influx of institutional money can create the necessary liquidity to spark another bull run.
On the institutional front, the emergence of players like Yale and Fidelity hasn’t sparked new life into the market. Some experts say beyond the entry of big-money players, the industry needs robust functioning custodial tools.
Bulls Remain Optimistic
For permabulls like Lee and Kelly, the current sideways trend has little impact on the imminent price rally that will occur. Recently, both individuals asserted that the top-ranked cryptocurrency would end the year on a high note.
For Lee, the break-even cost of mining the asset will push prices higher. He predicts that by the end of 2018, BTC’s mining cost will reach the $8,000 to $9,000 region. Thus, the price of BTC would have to increase substantially. Otherwise, miners end up taking massive losses.
Will Bitcoin experience a significant price rally before the end of 2018? Let us know your thoughts in the comment section below.
Images courtesy of Bloomberg, Shutterstock, and Coinmarketcap.com.