- Travis Kling shared a chart that showed bitcoin might be set for a bullish breakout in May 2020.
- Consider taking a contrarian stance because a post-halving dump happened in the past.
- Even if there’s a massive shakeout, bitcoin looks poised for a bull run this year.
Bitcoin has been struggling to keep its bullish momentum alive since it topped out at $9,188.10 earlier this month. The cryptocurrency is down nearly 10% from the yearly high. Many are saying that the bear market is not yet over. They claim that bitcoin is due for a plunge.
Travis Kling of crypto asset management firm Ikigai is not among the bitcoin doomsayers. The chief investment officer believes that the top cryptocurrency is due for a rampaging bull run.
Crypto Bullish Technicals Coinciding With Much-Anticipated Halving Event
On Thursday, Kling took to Twitter to share a bullish technical setup of bitcoin. The chart touts one of the most perfect trendlines I have ever seen. The diagonal support has been keeping the top cryptocurrency afloat since 2015. Bitcoin touched the support earlier this year but it showed no signs of breaching it.
What’s even more interesting is that the diagonal resistance and the diagonal support look like they will converge in May 2020. At that time, bitcoin’s block rewards to miners will be cut in half from 12.5 BTC to 6.25 BTC. This halving is one of the most bullish events in bitcoin history as it reduces the inflation rate to 1.8%. That number is lower than the Federal Reserve’s 2% target.
I also expect selling pressure to ease as block rewards are halved from 1,800 BTC to 900 BTC per day. If bitcoin trades at $8,000, miners would dump $7.2 million worth of bitcoin instead of $14.4 million per day. That’s a big difference.
Fundamentals point to a technical breakout and the commencement of a bull market after the halving.
Crypto Prepare for a Nauseating Shakeout
The halving is such a bullish event that a long squeeze is not out of the question. Speculators might long the top cryptocurrency in anticipation of a bull market after the halving. The smart money can then take the opportunity to short bitcoin and force over-leveraged longs to close their positions. This would result in a significant drop in price coupled with a deflated sentiment.
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The exact same scenario happened less than a month after the second halving. The dominant cryptocurrency opened at $663 on the day of the second halving. By August 2, 2016, it nosedived to $465.28. That’s a massive 29.8% devaluation.
Should the same script play out, we might see bitcoin crash to $5,500. At that price, bulls would have capitulated. According to legendary trader Peter Brandt, the capitulation would usher in a new bull market.
Dump or no dump, it appears that bitcoin may be due for a rampaging bull run this year.
Disclaimer: The above should not be considered trading advice from CCN.com. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
This article was edited by Sam Bourgi.
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