Researchers at Adamant Capital say Bitcoin is entering an accumulation phase which will see the cryptocurrency trade in a tight range on the way to another massive bull run.
Bitcoin Will be Range Bound in Accumulation Phase
In a report published on Thursday (April 18, 2019), analysts at Adamant Capital characterized the present Bitcoin cycle as an accumulation phase. In this phase, the researchers expect range-bound trading to characterize the BTC price action.
An excerpt from the summary introduction in the report reads:
During this accumulation phase, we expect for Bitcoin to trade in a range of $3,000 to $6,500 until the new bull market permanently cements the denarian cryptocurrency as a multi-trillion-dollar asset class.
According to the researchers, range-bound price action which is a hallmark of an accumulation phase signifies weaker hands trying to take profits at the higher price range and the stronger, more committed traders buying the bottom range in expectation of the coming price boom.
Going by previous accumulation cycles, BTC will trade sideways during this period. However, there is no consensus on the length of this present accumulation phase.
In the previous boom-bust cycle for Bitcoin between 2013 and 2016, the accumulation period lasted from February 2015 to May 2016. During that period, the BTC price 00 remained constrained between $200 and $400.
Shrinking Volatility – A Sign of Bitcoin Bottoming Out
If Bitcoin is in or approaching an accumulation phase, then the cryptocurrency must either have set or is close to setting a long-term price bottom. According to the report, the shrinking BTC volatility points to such a possibility.
The 60-day volatility for BTC/USD is currently below five percent. Apart from early November 2018 when it fell under two percent, this current level is the lowest in almost three years.
Commenting on the implications of the shrinking BTC volatility, the report states that long-term investors are beginning to dominate the market, rather than retail traders with short-term price targets.
Bitcoin Market Will be Worth Trillions of Dollars
Apart from signaling price bottoms, Tuur Demeester and Michiel Lescrauwaet of Adamant Capital believe the reduction in BTC volatility points towards greater global adoption.
According to the report, Bitcoin’s historical price action appears to be moving towards “shallow cycles and lower volatility” in place of “steep cycles and high volatility.”
As for over 84 percent decline in 2018, the researchers say it is a direct consequence of the 2017 bull run built on hype and market mania.
The report also predicts that Bitcoin will eventually become a multi-trillion-dollar market like gold which has a market capitalization of about $8 trillion, saying:
As Bitcoin matures into a globally traded commodity, it seems reasonable to expect its cycles to continue lengthening until eventually, they are on par with multi-decade cycles visible in commodities like copper or gold.
How long do you think the accumulation phase will last? Let us know your thoughts in the comments below.
Images via Adamant Capital, Shutterstock