Get up to date on the latest analysis and trading tips with our Crypto update week 43
- Can Bitcoin Duplicate the 2018 Bear Market? The Answer Will Surprise You!
- Dogecoin Consolidation Breakout Looks for 50% Rally
- Bitcoin Hash Rate Hits New All-Time High 0f 266.58M TH/s
Bitcoin (BTC) has suffered a brutal bear market in 2022, but there is something that resembles the 2018 bear market. The cryptocurrency’s price is once again found in a no man’s land as it’s struggling to find a clear direction near the $20,000 psychological level, the same way it was struggling at the $6,000 level back in 2018.
Bitcoin 2018 Bear Market
The current price structure resembles the 2018 bear market more than you think. The price has been consolidating for about 5 months with a base near the $17,500 level. However, Bitcoin has been in a bear market since November 2021, when it peaked at around $69,000 — an 11-months bear market.
We can draw some parallels with the 2018 bear market, which peaked in December 2017 at around the $20,000 level. Bitcoin’s price bottomed 12 months later, in December 2018, at around $3,150.
If we closely compare the two bear markets, we can draw other striking similarities. In both cases, Bitcoin’s price found a temporary bottom during the summer period in June 2018 respectively June 2022. Additionally, the price action went into consolidation, developing a descending triangle pattern that led to the final breakout to the downside.
Looking ahead: Bitcoin may only have one more leg to the downside to go before the bear market ends. So, if Bitcoin is trying to duplicate the 2018 bear market, it will need to drop to $10,000 to mimic the 50% drop we had in December 2018. However, considering that Bitcoin is not as volatile as it once was, such a huge drop may not be in the works. Instead, we may have a more “mild” drop to the $14,000 support level.
Dogecoin (DOGE) price broke above a 2-month consolidation pattern opening the door for an extended rally. This consolidation pattern projected an upside-measured move price target of around $0.10, representing a 3 standard deviation move from the current price range or roughly 50% gain.
DOGE Consolidation Pattern
DOGE’s price fluctuations since August 26 fit into a rectangle consolidation pattern with a horizontal support of $0.055 and a horizontal resistance of $0.068. The breakout above $0.068 is potentially calling for an end of the consolidation pattern.
In theory, measuring the size of recent consolidation can help us identify possible price targets to the upside. This is also referred to as the measured move price target, which states that the next swing leg will be roughly equal to the previous swing leg.
If we project the same price range to the upside, the next potential resistance comes at the $0.081 level, representing one standard deviation from the current price range. A 2 standard deviation move will send the DOGE price at $0.095, while a 3 standard deviation move will send the DOGE price at $0.108.
The current price structure favors a 3 standard deviation move because it aligns with a fresh supply zone that hasn’t been retested.
Additionally, the Relative Strength Index (RSI) is printing higher highs in momentum readings, reaching the highest reading since April 2021. This is a positive signal that aids the bullish case scenario.
The hash rate that measures the computational power of the Bitcoin (BTC) network to process transactions stroked a fresh all-time high, reaching 266.58M TH/s on October 12. Despite low Bitcoin prices and significant difficulties, the asset’s mining activity appears to be growing.
Bitcoin Hash Rate
According to Blockchain.com data, as of October 24, Bitcoin’s mining hash rate tapped a new all-time high of 266.58M TH/s at block height 758,138. After reaching a fresh all-time high, the network’s hash rate marginally decreased to 262.49 TH/s.
One of the benefits of a rising hash rate is that block times are noticeably faster. At the time of writing, according to statistics Blockchain.com, the current BTC block generation time is around 7.19 minutes.
At the same time, the number of unique addresses used seems to be bottoming at 630k, while the number of transactions per day appears to stabilize at around 260k transactions per day. In June 2021, the number of daily transactions plummeted shy below 200k, but since then, we have experienced a steady increase.
The current divergence between the hash rate increase and the Bitcoin price decrease is not in line with historical trends. Usually, when the hash rate increases, Bitcoin’s value also surges. Conversely, the hash rate tends to decrease alongside Bitcoin’s price.
Overall, the rising hash rate boosts Bitcoin mining difficulty and, to a certain extent, points to the asset’s next price movement.