Bitcoin on course to test 20,000

BITCOIN was started in 2009 when a man by the name of Satoshi Nakamoto first launched the cryptocurrency through an open-source platform. The blockchain technology garnered the attention of the relatively obscure tech market, and prices of one Bitcoin grew from US$0.30-5.27 in 2011 alone.

In 2013, prices rose from double-digit to triple-digits by the end of the year, and with the strong attention on Bitcoin, speculation became widespread. By December 2017, prices soared to a staggering US$19,780 before diving sharply entering 2018, falling below US$4,000 at the year-end.

Prices then returned back above the US$10,000 level in mid-2019 and thereafter, prices have been hovering around US$4,000-11,000.

Looking at the bigger weekly chart, we can see that the decade-long bull run until December 2018 formed wave I of the cycle phase using the Wave Theory. The following three waves' downward movement marked by wave ((w)), ((x)) and ((y)) suggests that the next potential move is a corrective flat pattern. This was validated when prices rebounded from the low of US$3,128.89, when it went on a sub-5 wave movement to form the next wave ((w)) or ((1)) and the subsequent downward movement is marked by wave ((x)) or ((2)).

Moving ahead, there are two scenarios for us to consider:

Firstly, there is a possible impulse wave ((3)) ongoing, and should Bitcoin break above US$25,000, this could mean that we are in the next phase of a strong cycle phase of wave III, which will be a long period as well.

Secondly, regardless of a corrective or impulse, both wave analyses are pointing towards a strong upside with Bitcoin targeting the all-time high in the next mid-term period.

As such, there is both a corrective and an impulse wave labelling after wave ((x)) or ((2)).

Although we do not discount the fact of a sudden black swan impulse move, the time cycle perspective indicates that the likelihood of the above-mentioned impulse move is unlikely to happen as the corrective cycle phase usually takes half a decade to complete and current situation at maximum is only 2.5 years.

This means that if wave B is completed, wave C will have another two years of downward movement before embarking on a long and strong wave III of the cycle phase. Another factor is that the potential wave ((y))'s momentum is not as strong as it seems, and this could mean that the upside remains as a corrective move.

Currently, prices have already breached the resistance level of 61.8 per cent retracement of wave A or II and it is poised for a break-out.

If prices remain above US$15,000, Bitcoin will confirm the last leg of the upside to form wave B either at US$19,891.99 or an expanded/running flat at US$23,848.08.

From the technical pattern perspective, Bitcoin has also formed a cup and handle pattern, which likely sees the target level reaching the expanded/running flat target zone at US$23,848.08-25,187.64.

Disclaimer: Chartpoint is provided by Phillip Securities Research for information only, and should not be construed as investment advice.