Fundstrat’s co-founder, Tom Lee, has long been known as a Bitcoin Bull in the cryptocurrency community. Robert Sluymer, Managing Director and Technical Strategist at Fundstrat seems to be joining the company’s growing group of cryptocurrency bulls.
Promising Signs for Bitcoin?
On CNBC’s “Futures Now” segment, Sluymer stated:
“We think Bitcoin is starting to bottom off some very key support around $7,000 and we think it’s going to start a recovery process here.”
Sluymer also noted that he has a three-phase technical analysis process that allows him to try to predict future price movements of cryptocurrencies. The first phase, which is the deceleration or bottoming out of momentum indicators, may be just starting.
Sluymer pointed out that the first phase seems to be in effect when he said:
“While it is premature to conclude the correction is over, there was a positive technical development this week suggesting the first stage of a three-stage bottoming process is developing. Short-term momentum indicators are beginning to bottom.”
For the past week, Bitcoin has been hovering around the low to mid $7000s, in a low volatility state, as shown by the bottom most indicator in the chart below.
Volatility has become a key characteristic often attributed with the price of cryptocurrencies and seeing a slowdown in volatility might leave some market players in a confused state. I personally would attribute this decrease in relative volatility to the increased institutional involvement in the industry.
However, take volatility with a grain of salt in this case, as volatility levels we are currently residing at were seen just before the crypto boom of 2017.
But some have begun to believe that this is a promising sign, as they believe that Bitcoin is consolidating before the eventual retesting of ATHs.
$6500 Triple Bottom. Is it Possible?
However, Bitcoin is still over $1000 away from 2018’s low, which amounted to around $6500 back in early April. The low in April was actually a double-bottom, with Bitcoin reaching similar price levels back in February after December’s $20,000 Bitcoin. This has led some analysts who are more critical of Bitcoin’s price, to think that a triple-bottom could occur in the future. However, even if Bitcoin was to revisit those prices levels, past indicators show that there is a large amount of support at $6500.
Despite fears of a triple-bottom at $6500, the relative strength indicator (RSI) has been trending upwards (as seen by the chart above), finding a bottom of around 30 earlier this week. This RSI indicator, which is still located in the ‘oversold’ zone, may show that Bitcoin is prepared for upwards price action.
Over the course of this year’s price drops to $6500, RSI indicators often went as low as 30, with run-ups in price and positive indicators quickly following the aforementioned price drops. If historical values and patterns are of any merit, as they often are, this means that we could see a rapid Bitcoin run-up in the near future.
However, Sluymer believes that before that Bitcoin breaking past $7800 will have to be a precursor to the run-up which many have been waiting for.
Despite the potential for Bitcoin’s short-term success, Sluymer believes that the largest cryptocurrency may lose some dominance as some players like EOS and Tron (TRX) may outperform Bitcoin in the near future. He also mentioned that other cryptocurrencies residing in the top-40, such as IOTA, 0x, and WaltonChain have shown that they may also begin to encroach on Bitcoin’s 38% market share.
But Sluymer made it clear that he is still adamant about his belief that Bitcoin, along with other cryptocurrencies, will begin to see some upward price action very shortly.
He put it best when he said:
“If you’re short we think you should be very careful and reducing your short exposure. I think if you’re looking to be long this is where you start adding here to your long exposure.”
Charts from Tradingview.com
Image from Shutterstock