This is confirmed by several most recent instances of golden cross on the BTC chart, which sometimes turned out to be a false signal. During the period between April 2019 – April 2020 golden cross happened 3 times. Measured from the BTC price to the extremes:
- April 23, 2019, BTC increased by 155%,
- February 18, 2020, it dropped by 61%,
- May 20, 2020, it increased by 576%.
Moreover, in the previous cycle, between July 2014 and January 2018, we also find 3 such events. Their consequences were as follows:
- July 12, 2014, BTC dropped by 31%,
- July 15, 2015, it dropped by 31%,
- October 28, 2015, it increased by 6512%.
Thus, historical analysis shows that in half of the cases from the period between 2014-2020, the golden cross on the Bitcoin chart was a false signal. Nevertheless, it is worth noting that if it did lead to the continuation of the uptrend, there were impressive upward movements, which averaged an increase of 2414%. In contrast, the average declines were 41%.
Why This Recovery Could Be “The Golden Rally”
Drawing Fibonacci levels is done from the swing high to swing low, or vice versa. Doing so from the mid-November peak to the June bottom, projected exactly where the rebound began (pictured above).
0.618 is closely related to the Golden Ratio, or 1.618. The number is also referred to throughout history as the Divine Proportion. Fibonacci Day is named for such because of the 11/23 date matching the start of the Fibonacci sequence, which consists of 1, 1, 2, 3, 5, 8, 13, 21, and so on.
Taking any number in the sequence beyond 5 and multiplying by 1.618 gives an approximation of the next closest number in the sequence. Multiply by 0.618 instead, and you’ll reduce the sequence. The ratios are found all over nature, art, music, even in outer space.
The Golden Ratio has acted as all mid-cycle bottoms. | Source: BTCUSD on TradingView.com
In Bitcoin, the Golden Ratio of 1.618 has acted as the over mid-cycle bottom the past three bull cycles and to this day remains unbroken. If comparing to the past cycles, the 0.618 retest is especially critical after the mid-cycle move. It is from this level that the final stages of the bull run unfold.
Related Reading | Want To Learn Technical Analysis? Read The NewsBTC Trading Course
Current projections of the Golden Ratio above here, and 2.618 above it, would put the peak of the Bitcoin cycle at around $94,000 and $135,000.
Targets would be between $90K and $140K | Source: BTCUSD on TradingView.com
But looking ahead toward 1.618 or higher requires 0.618 to hold and the current all-time high to be breached. At that point, Fibonacci extensions become potential areas of resistance – much like how retracement levels can act as support.
Here, we have potential for The Golden Rally to unfold. #Bitcoin#BTCpic.twitter.com/l47CnVEnAK
— Tony “The Bull” Spilotro (@tonyspilotroBTC) November 29, 2021
Follow@TonySpilotroBTC on Twitteror join the TonyTradesBTC TradingView.com
Dave Levine: ‘I Hate a Chart That Goes Straight Up’
Levine’s video discusses how many crypto fans are smart but some digital currency investors are just following the momentum of hype. “They love the charts, because that’s all they got… It has nothing to do with bitcoin, right? Not like ethereum where you actually have an economy. So they love the charts, and they love a chart that’s going straight up. I hate a chart that’s going straight up. Especially if I want to get in,” Levine insists.
The entrepreneur is a proponent of the Ethereum (ETH) network and his content expresses this on numerous occasions. Some crypto supporters may even dismiss Levine’s opinion because of his favoritism toward ETH. However, a few digital asset fans agreed with Levine’s argument and responded to his statements on Twitter. For instance, the popular crypto Youtuber from the show “Colin Talks Crypto” replied to Levine’s tweet about the current crypto cycle.
“You’re totally correct,” Colin wrote. “We are MID-way on the bull run– not at the start. Anyone using this over-bullish terminology and saying “we’re just getting started” is misleading new people to buy in, at least in terms of the current bitcoin price cycle. I even made a video on this topic. Similar concept. “Why I would NOT recommend that my friends buy BTC now.” I share a story of my friend who got in mid-bull run and what happened to him.”
We don’t know exactly when these time frames officially began because many observers have different opinions especially when they got into the market early. Moreover, we don’t know what the top will be during this run-up and we don’t know exactly when it will happen.
What we do know is that there can be a lot of topical conversations from both sides of the fence and in the end, it’s up to the individual to decide whether or not they become a crypto investor at this time frame. People should listen to both interpretations and come up with their own reasoning as listening to FUD or hype and simply accepting it might not be a great idea. Check out Dave Levine’s video below to see what he has to say about Plan B’s “just getting started” statement.
Tags in this storyBear Run, Bitcoin (BTC), Bitcoin Price, Black Thursday, bottom, BTC, Bull run, Charts, Colin Talks Crypto, Dave Levine, December 2018, Ethereum (ETH), March 12 2020, Plan B, Price Cycle, stock-to-flow, top
What do you think about Dave Levine’s opinion in his latest video? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Bitcoinwisdom, Youtube,
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Market cycle investment strategies
There are a number of different trading or investment strategies that can be used in combination with market cycles. We will outline a few popular strategies, but there are plenty of others, each with their benefits and drawbacks.
Dollar cost averaging
Dollar cost averaging (DCA) involves investing smaller amounts of money on a regular basis, regardless of market conditions. It is a particularly powerful strategy in volatile markets such as crypto. It can also be a good way to avoid making emotional trades.
The drawback of DCA is that often your profits would be higher if you bought early with a lump sum. But this is difficult to predict, particularly for people new to crypto or investing.
Buying the dip
Buying the dip is a strategy that should only be used on assets with solid fundamentals. It revolves around identifying and buying price dips in an uptrend. Traders will use different techniques or metrics to calculate “buyable dips”, but generally traders will buy the dip if the asset has fallen by 10-20%.
The disadvantage of this method is that you might keep buying an asset that’s in a downtrend, believing that it’s a dip every time you buy.
Follow moving averages
Follow moving averages
Moving averages (MAs), are one of many powerful technical analysis tools. MAs depict the average price of a market over longer time frames, such as days or weeks. If used correctly, they can function as reliable signals to buy or sell. Figure 2 shows the MA 100 on the daily chart. The blue line represents the average price over the last 100 days of trading, which is seen as one of the most reliable moving averages. Using the example above, almost every time the price touched the MA 100 the market held firm or rallied higher. Once the MA 100 was broken, that signalled a selling opportunity as the market fell much lower.
One of the downsides of using MAs is that they rely entirely on past data that may not be relevant in the present or into the future. Most investors won’t make a trade based purely on MAs, but will instead use them in conjunction with other indicators.
Did You Know?
Traders often combine multiple MAs in order to generate additional signals. For instance, the “golden cross” occurs when the MA 50 crosses the MA 200 on the daily chart from below. This is considered a very bullish indicator. The inverse is the “death cross” that occurs when the MA 50 cross the MA 200 from above. This is a large bearish indicator.
Interpreting crypto and Bitcoin market cycles
Understanding market cycles is an important skill that every trader and investor should have. Market cycles offer a macro perspective on market fluctuations, which provides a useful contrast to the daily volatility seen in the crypto market. If used correctly, it can provide you with the perspective you need to execute great trades and avoid making costly mistakes.
Some market cycles are separated into four phases, including the accumulation phase, the mark up phase, the distribution phase, and the mark down phase. This is a very useful method, especially for quick reference, however there is a lot more nuance in using the more traditional model, which contains 13 different stages.