The probability of bitcoin ending its four-year February winning streak in 2019 is high, as the primary trend is bearish for the first time in the last three years. Further, BTC’s failure to capitalize on a bullish pattern on the 3-day chart indicates bearish sentiment is still quite strong.
BTC risks falling to December lows near $3,100 in the next few days.
The odds of BTC ending February in the green would rise sharply if prices see a strong bounce from the crucial 200-week moving average at $3,298.
Bitcoin could end its four-year February winning streak unless prices see a strong bounce from key support.
The leading cryptocurrency by market capitalization gained 16, 18, 23.5 and 1.6 percent in the second month of 2015, 2016, 2017 and 2018, respectively, according to CoinDesk’s Bitcoin Price Index (BPI).
BTC generally posts losses in January before putting on a good show in February. The January losing streak looks certain to extend to the fifth year running with a close tonight in the negative.
As of writing, BTC is changing hands at $3,414, representing a 7 percent drop from the monthly opening price of $3,693.
As seen above, BTC has posted gains in February in five out of the last seven years.
January was a good month for the cryptocurrency during the three year period of 2012–2014.
BTC is reporting losses in January for the fifth consecutive year.
However, the odds of bitcoin posting gains in February for the fifth year straight are quite low, as the recent drop to six-week lows has put the bears back in a commanding position.
The bearish setup, however, would weaken if the crucial 200-week moving average support, currently at $3,298, holds ground for the second time in two months. That could yield a sustained rally to $4,000.
The above chart shows the 5- and 10-month MAs are trending south and BTC is trading well below these averages for the first time since 2015.
Put simply, the primary trend heading into February is bearish, while bullish conditions prevailed in the previous three years. Hence, BTC may have a hard time posting sustainable gains in the next four weeks.
BTC jumped above $4,000 in mid-December, confirming a bullish divergence of the RSI – a strong indicator of a bearish-to-bullish trend change.
The follow-through to that trend reversal, however, has been anything but bullish. Moreover, prices fell to six-week lows earlier this week.
BTC’s inability to produce significant gains despite the RSI divergence indicates the bearish sentiment is still quite strong.
On the weekly chart, BTC has carved out a bearish-lower high above $4,000, reinforcing the negative view put forward by the downward sloping 10-week MA.
The cryptocurrency, therefore, could soon revisit December lows near $3,100. A violation there would establish fresh lower low and open the doors for a deeper drop below $3,000.
The probability of BTC posting gains in February would improve if the 200-week MA, currently at $3,298, again serves as strong support. That average had put brakes on the sell-off in December and was followed by a corrective bounce to levels above $4,000.
Disclosure: The author holds no cryptocurrency at the time of writing.
Bitcoin image via CoinDesk archives; charts by Trading View