If you’ve perused Crypto Twitter at all over the past months, you’ve likely seen the term “Bitcoin echo bubble” mentioned incessantly.
There are some investors that believe that Bitcoin’s current price action is effectively a “do-over” of 2018’s Crypto Winter — in other words, this market may be in the midst of Crypto Winter 2: Electric Boogaloo.
Bitcoin Repeating 2018’s “Crypto Winter”
2019 has been an absolute roller coaster for the cryptocurrency market; Bitcoin has traded at $3,500 and $14,000 and everywhere in between. Due to the volatility and shape of the price action, many have likened 2019 to 2017’s bubble and the subsequent burst of said bubble. While some permabulls have laughed this off as pure conjecture, an up-and-coming analyst that goes by “Velvet” has drawn attention to an eerie fractal.
The analyst pointed out that in the bear market of 2018 and 2014/2015, Bitcoin broke down from its 21-week moving average (MA), bounced from the 55-week MA, retested the 21-week MA to break down further, then lost its 55-week MA in succession.
Funnily enough, BTC seems poised to play out this cycle yet again, having lost its 21-week MA, bounced off the 55-week MA, and having retested and failed to break above the 21-week MA.
This cycle playing out in full would mean that Bitcoin has one more leg lower prior to the start of the next bull market.
What’s crazy is that this “echo bubble” theory has credence, more credence than what Velvet laid out above. A very important signal that last flipped bearish before the near-50% plunge from $6,000 to $3,150.
The signal in question, the Hash Ribbons — an indicator tracking the health of Bitcoin’s hash rate — has just seen a bearish crossover, with the long-term hash rate average crossing above the short-term hash rate average.
History repeating would see Bitcoin tumble 50% in the coming six weeks to find a bottom, especially as miners start to pull their machines from an active operation and start to sell their stashes to keep the lights on.
Though, there is some hope for bulls, albeit somewhat limited hope. Per previous reports from Ethereum World News, Carl “The Moon” believe that Bitcoin may be providing investors with an opportunity for some price upside. He remarked in a recent tweet that the technicals are actually favoring bulls, not bears. His thesis is that there is more money on the short side of BitMEX than long, the cryptocurrency has just hit the 61.8% Fibonacci golden retracement level, and BTC is in the midst of a bullish falling wedge pattern — marked by tightening price action and falling price action.