Will Bitcoin be down more, or grow up again (March)?

Two case scenario for BTCBTC

Prices of all crypto assets are moving through cycles. Prices for altcoins and popularity of ICOs depend mostly on Bitcoin - when it makes sharp moves either direction, alts usually bleed. So, what would be Bitcoin's next move, and how it will affect the crypto market?

Bitcoin has been very volatile during last weeks. Margin trading (on Bitfinex, Bitmex, and OkEX) and FOMO / fear are causing intra-day jumps over 1000 dollars. If the market is oversold and a lot of margin shorts are opened, a quick move up would cause stop loss run (so-called short squeeze) among the shorter pushing the price higher. Then FOMO kicks in, and retail investors start to buy, pushing it even higher. Then, a lot of margin longs are opened. Same as with shorts, sharp move down would cause long position sell-off pushing price lower, causing fear among investors followed by high-volume capitulation and market reversal.

Short squeeze was the reason for recent rally from 8500 to 10k, so we wouldn't call it bearish trend reversal just yet, but it could have triggered it. Obviously, there are two scenarios for BTC right now - bullish and bearish. Let's take a look at both:

Weekly candle closed around weakly support at 9k, meaning the price is still consolidating in a range. Daily closure above 10k would mean that trend has reversed and is ready to test channel high around 11k. If that level broke on the weakly next candle, the bear trend is reversed and Bitcoin is ready to test 15-17k levels.

Rejection of 9k / 10klevels on the day would mean that last move up is not supported by real investors and was caused only by a short squeeze. The number of open short contracts has decreased from 23 to 16k BTC in one day, meaning that 7k BTC was bought at the market, pushing price up.

What do I think?

I’m 60% bearish and 40% bullish at the moment. The market moves could be highly manipulated because of low trading volumes, so big players can easily move price another 1000 dollars a day either direction.

What does this mean for altcoins?

In both scenarios, we anticipate they will continue declining in BTC value. If BTC makes the bull run, it's a good thing for the crypto market overall. The money would flow from altcoins to Bitcoin, causing further alt dump. But money would stay inside the crypto market, meaning that when BTC bull run is paused, altcoins will pump hard again. For this scenario, BTC must reach 15-17k in the upcoming month. If BTC fails to move through 11k and falls below 7.8-8k, alts would decline in BTC price also. However, in this case, money probably would start licking from the crypto market. Confirmation of this would be increasing daily trade volumes on fiat exchanges like GDAX and Kraken with declining price and weak bounces after the breach of critical support lines. This is a highly negative scenario for crypto, meaning that price bubble has popped and we would have something like we had in 2014-2015 when after dig price dump crypto markets lost their liquidity, volumes were supported only by traders-enthusiasts, and regular people avoided crypto.