Bitcoin (BTC-USD) started 2022 around $44,000 and most analysts believed that the mythical $100,000 would be broken in the following months. Instead, Bitcoin is sitting just below $17,000 today in the midst of a historically deep bear market.
2023 promises to be a tough year for Bitcoin as the world’s first cryptocurrency faces not one, but two “death crosses”.
Bitcoin is looking forward to the start of the year, but I believe that within the next few months, Bitcoin will hit an all-time low and may begin the next bull phase. However, I would expect a lot of sideways movement before the real crypto rally begins in earnest.
Weekly Death Cross
Moving averages are commonly used indicators in technical analysis. When the 50-day moving average crosses below the 200-day moving average, it is called a death cross and is considered a bearish indicator.
For the first time in Bitcoin history, the 50-day moving average may break below the 200-day moving average on the weekly chart.
If the price of Bitcoin stays at these levels or lower, this could happen in the next few weeks. Additionally, the RSI is oversold on the weekly chart and the MACD also looks set to give us a bearish crossover.
All of this is in line with my earlier prediction that Bitcoin will find a final bottom at around $14,000.
Hash Ribbon Crossover
Bitcoin is about to undergo a historic and unprecedented bearish crossover, and a few weeks ago the cryptocurrency also experienced a bearish crossover in the Bitcoin Hash Ribbon.
Bitcoin hash tapes are used to measure power in the Bitcoin mining market, but they can also tell us a lot about the price of Bitcoin. Hash tape indicator consists of 30-day moving average and 60-day moving average of hash rate.
When the 30-day moving average crosses below the 60-day moving average, it usually indicates that miners have given up, while the 30-day moving average crossing above the 60-day moving average is considered a positive signal.
We had a bullish crossover in August, but last month we once again saw the 30-day moving average break below the 60-day moving average. Miners giving up could lead to increased selling pressure for Bitcoin, which could accelerate the current selloff.
What’s in Store for 2023?
Despite the bearish outlook for Bitcoin right now, I am still bullish on Bitcoin in 2023. Bitcoin should find a bottom in the first half of the year. But this does not mean that we will immediately rise to new heights. It is more likely that we will see some “sideways” movements for the second half of the year, as we saw in the previous Bitcoin cycle.
Let’s take a walk down memory lane. Back in 2017-2018, Bitcoin was at the peak of its bullish rally, where the price of Bitcoin was approaching $20,000. However, over the next 12 months, the price of Bitcoin began to decline, causing the cryptocurrency to lose over 80% of its value.
In December 2018, bitcoin rose to just above $3,000. Bitcoin’s price more than quadrupled over the next few months, only to see a selloff that would see bitcoin retest the lows it hit in December.
Bitcoin pulled back around 88.7% before hitting a solid bottom, after which we saw a fast and furious rally that took Bitcoin to all-time highs in 2021.
This kind of price action is typical of the Bitcoin cycle and Elliott Wave momentum, where wave 1 is followed by wave 2, which can bring back a significant amount. After only these 1-2 setups, we are ready to convincingly rally in wave 3 to new highs.
I expect Bitcoin to follow a similar pattern after bottoming out in the first half of the year.
In conclusion, Bitcoin’s start to 2023 should be a mirror image of the start it got in 2022. While everyone is looking for a rally to new all-time highs, we’ve had a huge sell-off. Now, as everyone expects Bitcoin to crash and burn, I believe the cryptocurrency will give us a significant rally after bottoming out in the next few months. This rally could give us a significant investment opportunity, as the price of Bitcoin could easily double or triple in a matter of months. However, after that I would expect Bitcoin to give us one last opportunity to enter the market with a pullback that could be near all-time lows at the end of the year or even in 2024.