The End of Bitcoin’s Bear Market

 The year 2014 has been quite a bad year for Bitcoin speculators. As we enter into the last weeks of December, traders and market participants anticipate in desperation for a trend reversal. So far, after making a low of $275 on Oct 5th at Bitstamp, the price movement during the last ten weeks have been on a stagnant mode. Trading in a tight range, the calls of doom and the end of Bitcoin can be heard on several Bitcoin forums around the web. What does it say about market psychology? Well, usually, this sentiment usually echoes when market is about to complete a cycle – and in this case, the longest bear market in the history of Bitcoin.

Just last week, Microsoft – the tech giant announced that it has started accepting Bitcoin for its digital goods. This was great news for Bitcoin as it further legitimizes the use case for mainstream market. Following the announcement, Bitcoin price surged 7.2% from a low of $339 to $364. But, once again, the day closed at $346. Another positive news and yet no rally that everyone has been expecting. In fact, after the China ban and MT.Gox debacle during early 2014, Bitcoin has seen positive news throughout the year. There have been constant developments and capital invested in the Bitcoin ecosystem and yet the price keeps slowly declining. Well, that’s because news don’t move the price. It’s a myth. Market makers understand this psyche better than anyone else.

Instead of relying on news, educated traders look at charts. Technical analysis and tools like Elliot Wave are a mathematical way to compute the price movement in the future. So, what do these tools say about the future? Elliott Wave has but a few rules which can not be broken.  One of them is that a wave four can not overlap a wave one even briefly. The high of April 2013 rally at $266 marks the completion Wave 1 and the market is currently trading in Wave 4. Due to these reasons, many predictions of Bitcoin going below $100 hold no evidence to back their claim.

The end of bear markets are known to end violently. At the time of this post, 12/18, Bitcoin is trading at $322 on Bitstamp. The week opened on 12/15 at a high of $357 and saw high selling starting from Monday. One day RSI (Relative Strength Index) went from 45 to 31. The weekly MACD still remains red while weekly RSI indicates a sign of oversold.

Something here is about to change. While daytraders crunch numbers and take profit from every little bounce and fall, most of Bitcoin believers hold it as a long term investment. While 2014 has been the year for Bitcoin ecosystem, many proponents believe that the price has to soon catch up. With prise rising, demand will follow. The bears have certainly ran out of steam given the low trading volume and the time for trend reversal is almost here.

Let’s see what 2015 brings for Bitcoin!