It seems like we’re just not content with a bullish scenario involving Bitcoin; a bearish narrative is always around the corner!
After a 6 percent drop over the last 3 days, the community speculated whether the upcoming Chinese New Year will have yet another bearish setback on BTC‘s price.
A historical storyline that has played over the last 4 years is that Bitcoin dumps after the Chinese New Year celebration. It is believed that several Chinese investors cash out their holdings during the holiday period, which creates an additional selling pressure in the market.
BitMEX’s Arthur Hayes predicted a market change himself on 23rd January, predicting a turnaround in the industry. He said,
“The year of the rat starts this weekend. Time for #Bitcoin volatility and volumes to nose dive.”
There has been a number of technical indicators that have flashed sell signals over the past week, as a couple of closing prices indicated a selling period for the first time since Bitcoin’s peak in June last year.
There is data that suggested that historically Bitcoin has undergone a bearish period following the Chinese New Year.
In 2016, BTC hit a January high of $458 dollars and post the Chinese New Year, the price suffered a 20% slump to $365 on February 3rd.
2017 and 2018 followed a similar pattern when a hike of 18.67 percent and 24 percent, suffered a depreciation of 19.84 percent and 50 percent, respectively.
2019 was no different for Bitcoin; the valuation stretched from $4087 to $3328 post the Chinese Holiday. However, the key factor missed in 2020 is the strength of the surge and the consolidation backing Bitcoin’s valuation. Moreover, BTC has also made the best start with a surge of over 30 percent.
Unlike previous years, Bitcoin’s bullish sentiment this time around has not been a flash hike as the coin has periodically breached resistance lines over the past three weeks. From $6900, BTC managed to take over resistance at $7300, $7700 and $7900-$8100, validating the strength of the candles. Another key factor to take into account is that BTC has undergone healthy consolidation during these periods. The market has had time to breathe, with traders maintaining constructive buying pressure.
2020’s Chinese New Year is on 25th January and the possibility of a pullback is definitely on the cards following the holiday period, but a breach below $8100 is least likely. At press time, the price of BTC was at $8310, so a slide to $8100 is a healthy turnaround, considering the largest digital asset is riding the bullish wave.