It cannot be denied that Bitcoin and other assets exhibit a cyclical nature. In fact, bikes are incorporated directly into cryptocurrency code, revolving around halving the asset block reward that occurs roughly every four years. The four-year cycle causes an imbalance in supply and demand, which greatly favors price appreciation.
But that’s not the only way the cryptocurrency has exhibited cyclical trends, and it has one Bitcoin analyst expecting a “deep correction” on the basis that a key date and pivot point have been reached. Is a correction more typical of a past asset bull running around the corner, even as the price goes beyond $ 20,000 for the first time?
Pivot Point Could Bring Bitcoin “Deep Correction”, According to Cyclicality Take Analyst
The cryptocurrency market’s chatter has never been higher, now that Bitcoin has broken above $ 20,000 for the first time in its history. The last time the cryptocurrency came close to such a number, was when it peaked back in 2017 just below the round number.
To rewind that, the stage was set very differently. Retail investors at FOMOing of late were hoping to strike it rich, while organizations were, rightly, skeptical about the asset’s sustainability at such prices, and are waiting to see.
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Bitcoin built a stable base on a market cap of around $ 200 billion, making it a network with real staying power. The same organizations that didn’t buy into the sudden blockchain revolution, now find the cryptocurrency far more valuable than even $ 20,000 – but because of its use as an inflation hedge.
The wealthy of the world are looking into BTC as a way to protect purchasing power following whatever outcome is coming from a year that is changing society.
That former peak was on December 17, 2017 – exactly three full years up to the date from tomorrow. And on that three-year anniversary, while a new peak is always above $ 20,000 set, one analyst expects a similar response to happen next.
December 17 is of significant importance to the cryptocurrency's cyclicality | Source: BTCUSD on TradingView.com
Why Is The Cryptocurrency Market Highest And Bottom In December?
Bitcoin’s meteoric rise in 2017 ended on December 17. Interestingly, Bitcoin also bottomed a year later on the same date in 2018.
The odd string of cyclicality continues, with the bottom of 2019 set at around $ 6,400 – you guessed it – December 17. Tomorrow is December 17 again, and while the circumstances are so different from every “previous pivot point,” the event is enough to address it.
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The analyst mentioned above is not the first to notice such seasonality or cyclicality in Bitcoin and other cryptocurrencies. Most market participants believe in cyclical theories, based on halving, so why not subscribe to the idea that tops and bottoms can occur in a given set of dates?
Some of the world’s greatest living merchants and analysts ever believed that there was money to be made by understanding these cycles. WD Gann developed tools that look specifically at time in relation to price and geometry, similar to how astrology focuses on planetary alignment.
The “Gann Box” below adds credibility to the cyclical theory, where Bitcoin could see a “deep correction” of between 30 and 40%, before springing back to $ 30,000 or more. The 30-40% correction zone would fit between 0.5 and 0.618 Fibonacci rating levels. The tool goes beyond timing every December 17 and also happened to capture the peak of June 2019 and the June 2020 consolidation period that led to this point.
W.D. Gann created tools that could clue analysts in on how to time markets | Source: BTCUSD on TradingView.com
Data shows that Bitcoin typically corrects 37% in bull markets, which would be in line with such targets. At the most extreme end of any downside, $ 11,700 could be the inversion point. But a $ 13,800 re-test seems highly likely, despite the asset’s ongoing rally.
The chart above also highlights other key dates that appear to be pivot points for the cryptocurrency. The earliest is February, where the deep-V short-term bottom was set back in 2018, acting as the last iteration of bear market lows, and was the highlight just before the fall of Black Thursday.
He left behind very few secrets on how to use his tools | Source: BTCUSD on TradingView.com
Next is April, which has been a strong bullish signal for four consecutive years.
Other Gann tools that could assist with timing could also shed some light on what happens next. Unfortunately, the “legendary trader” rarely shared his secrets, so using these tools is not always clear.
One thing he left behind, was at least some proof of cyclicality in commodity markets around December, live on his Wikipedia page.
Gann's theory on markets topping was based on planetary alignment | Source: Wikipedia
Bullish investors may be stepping forward with the idea of such a large correction from here or that such pivot points exist. But let’s not forget, the last time Bitcoin hit $ 20,000 it was cut down to less than $ 6,000 in just a few weeks. That magnitude of correction is unlikely, but it presents the reason why a 30-40% fall cannot be ruled out, even with the asset clearly entering its next bullish period.
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