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Home Technical analysis BTC

Bitcoin Trend Strength Suggests No End In Sight, Second Most Powerful Historically

Tony Spilotro by Tony Spilotro
2 weeks ago
in BTC
Reading Time: 3min read
bitcoin trend strength adx

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Crypto enthusiasts expected Bitcoin to pick up momentum in 2020 thanks to the asset’s block reward halving mechanism. At best, investors anticipated a repeat of the 2017 rally, but the law of diminishing returns made such a scenario an unlikely reality.

But instead, the current uptrend is now the second most powerful in the cryptocurrency’s history. Here’s what a technical trend strength measuring tool says about where Bitcoin could go from here.

Perfect Storm Economic Environment Fuels Unstoppable Cryptocurrency Momentum

Bitcoin is well known and even feared for its bubble effect. The asset has a reputation for wild volatility, rising thousands of percent in a single rally, only to retrace 80% of the entire swing.

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Getting in ahead of an epic run can result in life-changing wealth, as investors who bought the blood on Black Thursday have learned as the new year arrived and Bitcoin shot above $40,000.

Related Reading | TA: Bitcoin Price Sets New ATH, Why BTC Bulls Could Aim $40K

FOMO from both retail and institutions is driving this rally, keeping demand high. The halving slashed the supply, and what little is left is being scooped up by Grayscale to offer to its institutional clients at a premium.

There is also a perfect storm economic environment with near-endless fiat money printing for the cryptocurrency to thrive in.

The combined effect of all of these factors has resulted in an uptrend that is far stronger than anything 2017 had to offer. That year was the year that made Bitcoin a household name, rising from $1,000 to $20,000.

If this current rally is much stronger, what exactly might that suggest for the emerging asset?

 

bitcoin adx

The Average Directional Index could hint at far more upside for Bitcoin | Source: BTCUSD on TradingView.com

Bitcoin Trend Strength Second Most Powerful Historically: What This Means

According to the Average Direction Index, created by market technician J. Welles Wilder, Jr., the current uptrend on weekly timeframes is now the second most powerful in history.

The tool is used to gauge trend strength and give a read on when trends could be coming to an end. Bitcoin has reached a level that could signal the trend is nearing its conclusion but given all of the other factors and where the indicator says the cryptocurrency is compared to its 2013 cycle, more upside is possible.

Related Reading | On-Chain Data Shows Bitcoin Rally Has Yet to Enter “Overheated” Territory

The current ADX reading around 65, which according to the 2013 rally, pumped another 2,000% before any meaningful correction took place. That correction resulted in a 50% plummet, but ultimately the rally ended in late 2013 with an over 10,000% ROI from the current ADX reading to the peak.

Is this what investors should expect from Bitcoin in 2021?

Featured image from Deposit Photos, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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