Wall Street trader Martin S.
(Buzzy) Schwartz, in his book "Pit Bull," explains the first law of
physics, which states that an object in motion will continue to move until it
is affected by an external force. In this case, Bitcoin has experienced a
nearly 50% rally in the first seven weeks of 2023, reaching a six-month high of
$24,900. The rally has been supported by external forces, such as positive
sentiment in traditional markets. Despite the Federal Reserve's concerns and
the resulting increase in Treasury yields, the crypto market and Wall Street's
tech-heavy Nasdaq index have remained resilient.
According to one chart analyst,
Bitcoin is expected to continue its upward trend, potentially doubling in value
in the coming months. William Noble, the director of research at Emerging
Assets Group and former analyst at Goldman Sachs and Morgan Stanley, believes
that Bitcoin is breaking out from a long basing formation. There is a common
saying that the larger the base, the higher the move upwards. Noble correctly
predicted Bitcoin's surge from $20,000 to $40,000 in late 2020, and he now
expects it to move from consolidation to another parabolic move back to
$56,000.
The expression "going
parabolic" is commonly used in the crypto market to describe an expected
impulsive move higher with limited downticks. Noble believes that Bitcoin is
breaking out of its long-term consolidation and is primed for another
significant move upwards. With Bitcoin having already experienced a significant
rally in the first few weeks of the year, Noble's prediction suggests that it
could continue to gain momentum and potentially reach a new all-time high in
the near future.
While there are always risks and
uncertainties in the market, including potential external factors that could
impact Bitcoin's upward trajectory, Noble's prediction is based on his analysis
of the cryptocurrency's recent performance and trends. He believes that
Bitcoin's long basing formation and current market conditions are supportive of
a continued move higher. As with any investment, it is important for
individuals to do their own research and carefully consider their own risk
tolerance before making any investment decisions.
Bitcoin's recent surge in price
comes after an extended period of sideways trading in the bear market around
the $18,000 level. This phase is known as the basing pattern, according to
William Noble, the director of research at Emerging Assets Group. During this
period, Bitcoin remained relatively stable, and there was little movement in
its price.
However, a bullish trend appears
to have emerged, with the momentum indicator relative strength index (RSI)
showing a bullish divergence on the weekly chart. This suggests that the
downtrend has come to an end and that the bulls have gained strength, while the
bears have lost power. This bullish divergence occurred in November 2022, when
the RSI did not follow the new low in price.
This divergence is a positive
sign for investors who are looking to enter the market or increase their
holdings, as it indicates that the market is likely to continue moving upwards.
However, as with any investment, there are always risks and uncertainties to
consider, and investors should carefully assess their risk tolerance and
conduct their own research before making any investment decisions.
The crypto market has received
some positive news, as the Nasdaq has broken out of a bull flag technical
pattern, which is known to accelerate an uptrend. Additionally, Bitcoin's
correlation coefficient with Nasdaq has increased to 0.75, indicating that the
two assets are moving in a similar direction. According to William Noble, the
director of research at Emerging Assets Group, the Nasdaq's bull flag suggests
that there could be another major run higher in equities, potentially to a new
all-time high.
The correlation between Bitcoin
and the Nasdaq is significant, as it suggests that there is a strong
relationship between the two markets. This is an important development, as it
shows that traditional markets and cryptocurrencies are increasingly
intertwined, with the movements in one market affecting the other.
Nasdaq's Bull Flag
The fact that the Nasdaq has
broken out of a bull flag is also significant, as this technical pattern is
known to be a reliable indicator of an uptrend. The pattern is formed when a
sharp upward move in price is followed by a period of consolidation, during which
the price moves in a narrow range, forming a flag shape. The breakout from this
pattern is often accompanied by a strong move higher, as buyers take control of
the market.
Overall, the combination of the
bullish divergence in the RSI and the breakout from the bull flag on the Nasdaq
is a positive development for cryptocurrency investors. However, as with any
investment, there are always risks and uncertainties, and investors should
carefully consider their risk tolerance and conduct their own research before
making any investment decisions.
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A bull flag is a technical chart
pattern that occurs when a correction follows an initial sharp increase in
price. When the price eventually breaks out of the flag, it confirms a
resumption of the broader uptrend. The pattern is considered bullish, as it suggests
that the buyers are taking control of the market and are likely to push the
price higher.
The Nasdaq index experienced a
severe decline of 37% over an 11-month period up to October 2022. However, this
decline was seen as a correction within the broader rally from the March 2020
lows. On the weekly chart, this decline formed a flag pattern that recently
ended with a bullish breakout, indicating a potential resumption of the broader
uptrend.
According to William Noble, this
breakout on the Nasdaq index could signal the start of a new bull market in
stocks that looks similar to the previous one. As a result, both crypto and
equities could perform well in 2023. This is an exciting prospect for
investors, as it suggests that there could be significant opportunities for
profit in both markets.
Interestingly, the Nasdaq's daily
chart also shows a bull flag breakout, as noted by popular analyst Declan
Fallon. This is an encouraging sign, as it confirms the bullish outlook for the
index and suggests that there could be further upside potential. Overall, these
developments are positive for both the Nasdaq and the crypto market, and
investors will be closely watching for further signs of bullish momentum.
Potentila Breakout in Ether
Ether (ETH), the second-largest
cryptocurrency by market value, has not yet broken out of an expanding
triangle, which is a technical pattern identified by trendlines connecting Jan.
21 and Feb. 2 highs and lows registered on Jan. 25 and Feb. 13. A breakout from
this pattern could potentially result in significant gains in Ethereum's native
token.
William Noble believes that the
expanding triangle in ETH is a potentially bullish sign. He draws parallels to
similar formations that occurred in 2009 and 2010 when the stock market rallied
post-global financial crisis. He specifically points to the S&P 500's
expanding triangle breakout in 2009 as an example of how such a pattern can
lead to significant price increases.
Overall, investors will be
keeping a close eye on the expanding triangle pattern in ETH and waiting for a
potential breakout that could signal a bullish trend for the cryptocurrency. If
this happens, it could potentially result in significant gains for investors in
Ethereum's native token.
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