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Cryptocurrency prices soar in the first week of May; Will Seasonality influence Bitcoin’s prices again?

Bitcoin and Ethereum, the leading cryptocurrencies had a strong finish at the end of April by marking their respective all-time high prices. The start of 2017 has been staggering for Bitcoin as negative fundamentals have hampered its price growth consistently in phases. Just when the currency was set for a Bull Run, one or the other problem would impact the prices turning the market bullish on a short term scale. Ethereum on the other hand has had a smooth run and gained good momentum during the scalability debate of Bitcoin. Investors proactively transferred their investments from Bitcoin to Ethereum to shield themselves from the price fluctuations during this phase boosting Ethereum’s prices. As we enter the 5th month of the year, the prices of the cryptocurrencies are going up and we believe seasonality is playing a strong role in this. Let’s dive deep into the internal dynamics of each of the cryptocurrency and what is in store for them:

Bitcoin went through threatening times:

Bitcoin had to overcome hurdles that could have ended the digital currency’s existence if the community didn’t reach consensus. The Blocksize debate or the scalability debate brought bearish clouds to the crytpocurrency’s price domain making it extremely difficult for the prices to recover in a quick time. The issue came as an insult to injury post Winklevoss ETF rejection and Chinese exchanges ban on withdrawals. Nevertheless Bitcoin has recovered in a fine fashion to break the all-time highs and register a new high for the cryptocurrency. With the scalability debate now resolved, Bitcoin is looking stronger than ever while trading around all-time highs. What remains to be seen is whether the trend will receive an unexpected boost due to seasonality or just continue to grow/dull down without any influence.

Ethereum sees unexpected boost:

Ethereum has been the cryptocurrency that tackled scalability issues in its formative stages to bounce back strongly into cryptocurrency sphere. Owing to its executable smart contracts on blockchain  and applications in various verticals Ethereum has found solid ground to grow without inhibitions. With Bitcoin’s scalability issue surfacing, Ethereum’s prices have sky rocketed to over $40 in the past month. With the talks of a possible Ethereum ETF, the prices further pushed higher making an all time high of $80.

Will the Seasonality Kick in?

We have observed that especially for Bitcoin, the markets have followed a good deal of seasonality with the prices going higher towards the end of the semester. This half yearly pattern may reflect a periodic activity on the part of institutional investors or swift moving of funds from one asset to other in sync with their seasonal cycles. Whatever it may be, the seasonality is a pattern that has been holding for the cryptocurrencies and we can surely expect a sudden spike owing to these factors in the near future.

Uncertainty clouds Bitcoin prices, shorting is not a long term option anymore

Bitcoin has enjoyed a super bullish run in February owing to numerous factors that has filled the market with heavy speculation. The currency was able to break the all-time high and is now cruising over $1200 levels. As the currency is exploring untraded regions, a lot of uncertainty has clouded the market judgement over the price movements from here on. While fundamentally the market is trending and has got support levels, let’s look into how the prices would behave technically in the near future and how this market can be traded:

Having the market view:

While trading any market, it becomes essentially very important to have a view about the market trend or atleast a good understanding of it. As indicated by the graph, the Bitcoin market has been heavily trending in the bullish direction with favorable fundamentals. With the speculation surrounding the US Securities and Exchange Commission’s decision over Winklevoss ETF, the market has seen a short bullish outburst. The trend lines show that the market has been bullish in a channel indicating low volatility and manifestation of good volumes in the market anticipating a heavy move.


Marking the right indicators:

After ascertaining the channel in which Bitcoin is confined to, it is quintessential to know the strength of the support level that is supporting the move. The base of the move would be the support level generally, but what would be really fruitful to find is the strength of this support level. For the current trending Bitcoin market, the move originated from $750 level after the drastic drop in prices due to Chinese interference. The price levels are 61% retracement levels of Fibonacci retracement level for the upward move from $560. Hence the move is backed by good support due to Fibonacci retracement levels and hence has a strong support.

Possible entry positions and positions to avoid:


Under the extremely bullish conditions, possible market entry points include the lower support line of the trend channel or the middle Bollinger band. If for some fundamental reason, the market comes all the way down to lower Bollinger band, with the Bollinger bands being steady, then taking a position at this point will turn out to be profitable. Under such extremely bullish conditions, it is wise not to take a short position expecting long term benefits. Short term short positions can  be taken to scalp rewards from the market owing to the volatility but not with a long term bearish view.