by Jamie Holmes
BTC-USD displayed huge intraday swings on May 25, where bitcoin posted a record high at $2760.10 then fell around $500 only to recover the $2400 handle hours later. While the momentum is strong, upward surge cannot go on forever and we detail why BTC-USD will peak sometime between June 12 and July 24.
Bitcoin markets have been characterized by speed and frenzy over the past few days, with numerous all-time highs broken successively since mid-April. The price action for the cryptocurrency on May 25 intensified even further; buyers were cut short of an attempt at $2800 and the market as low as $2260. The $2400 handle was recovered shortly afterward but volatility has lingered, with the market price at $2305 at the time of writing.
Trades per minute have been rising over the past few days, indicating a more active and volatile market. On May 25, this indicator peaked over 1,000 trades per minute across exchanges, illustrating the extent of the inflow of participants into the market, attracted by massive price fluctuations.
Demand for bitcoin in South Korea has exploded, with Bithumb, Coinone, and Korbit seeing more than $200 million in volume collectively during the past 24 hours, in turn commanding more than 8.5 percent of the entire volume of the bitcoin market. Therefore, traders should keep an eye on BTC-KRW pairs for any indications of change in momentum, as South Korean markets seems to be leading the price action.
BTC-KRW also breached the $4000 handle, peaking at 4,500,000 KRW, currently trading around $3800 according to exchange rates on the Korbit exchange.
When looking across the largest exchanges, such as Bitfinex and OKCoin, we see that the Market Facilitation Index is green on both the weekly and daily timeframes, suggesting that bitcoin will continue to move higher. Time and time again bitcoin proves to be resilient, effortlessly surpassing previous highs. The green index tells us that more participants are entering into the market and those traders are biased in the direction the market is moving. Of couse, we have to take the formation of the candlestick into account and the closing price as well.
However, for Bitstamp, the Market Facilitation Index is blue suggesting a fake, signaling the upward move on this exchange is not supported by higher volume.
During January 2017, BTC-USD completed 12 near consecutive record highs, and BTCManager reported December 13 that bitcoin markets would most likely peak sometime around January 23. Our analysis overshot the timeframe, over-accounting for weeks of consolidation whereas the markets displayed consecutive higher highs toward the end of the bull run, which peaked at $1139.89.
The weekly chart below shows that bitcoin has made eight near consecutive record highs on the BItstamp exchange since the low at $891.33. The bitcoin markets have shown relatively stronger resistance to exhaustion as compared to the general seven to ten near consecutive record high rule, as noted above. But let’s say for argument sake we anticipate 11 near consecutive record highs for the current bull run.
Using this indication of exhaustion, we see that bitcoin prices will most likely peak between June 12 and July 24. The earliest case scenario is around June 12, as the markets may continue the bullish streak and establish another three consecutive record highs in the weeks ahead. Alternatively, we may see three near consecutive record highs, which will play out until the week beginning July 24.
Looking at the longer-term price action, we see that it is highly likely that the candlestick for May will close above the Fibonacci extension at $1880.36. Once confirmed, this will open up the next Fibonacci extension level at $3041.14. Moreover, a monthly close above $2290 (upper third of May’s price range) is required for further bullish confirmation, as this will indicate a close of the candlestick in the upper third and will signal that bulls will remain firmly in control going into June.