Parabolic Bursts of Three Altcoins as Reference for Bitcoin Dip

Bitcoin’s (BTC/USD) climb from $3,693.85 at the beginning of 2019 to as high as $8,390 this month on Bitfinex is nothing short of impressive. The over 120% increase in just a few months has prompted many to declare that the market is in the midst of a parabolic run. Technical indicators do not deny that claim. Bitcoin continued to rise in spite of overheated technical signals earlier this week.

Nevertheless, parabolas always burst and when they do, they tend to fully retrace. In other words, they give back most of the gains of the run. That’s why if you’re looking to long bitcoin now, you’re better off waiting for the correction, which we are beginning to see today.

In this article, we study the parabolic bursts of Ripple, ChainLink, and Enjin Coin to map out the key levels where we can catch the big bitcoin dip.

Ripple (XPR/BTC)

Ripple’s run from December 20, 2017, to January 4, 2018, is a solid example of how parabolas work. In about a couple of weeks, the market broke out of a rounding bottom as it took out resistance of 0.00004. It then skyrocketed to as high as 0.00022968. That’s a face-melting growth of over 474% even though the market was extremely overheated.

Ripple chart

XRP/BTC Daily Chart

When the parabola exploded, Ripple slowly unraveled. Bears took their sweet time as they bled the market back down to the original price before the move at 0.00004. This case study illustrates how parabolic runs almost always give back all gains.

ChainLink (LINK/BTC)

ChainLink shows a similar scenario. On January 3, 2019, the market broke out of an inverse head and shoulders pattern. The breakout triggered a parabolic run from 0.00008 on January 3rd to 0.000158 on January 22nd. That’s a 97% gain in less than three weeks, which is not too shabby.

ChainLink chart

Daily chart of LINK/BTC

Like Ripple, ChainLink retracted all the way down to the original price of the parabolic move. Again, this supports our claim that parabolas give up most of their gains.

Enjin Coin (ENJ/BTC)

Our final example is Enjin Coin which was the talk of the town in March. After breaking out of a rounding bottom on February 24th, the market catapulted from 0.000018 to 0.00006391 on March 9th. That’s a whopping explosion of over 250 percent in a couple of weeks.

Enjin Coin chart

Daily chart of ENJ/BTC

Again, we have a similar scenario. When the run ended, Enjin Coin plunged to the breakout point of 0.000018.

Bitcoin Key Levels to Watch

Using the examples above, we have mapped out two levels to catch bitcoin when the parabola implodes, which began today. The first one is $4,800 because that’s the origin of the parabolic move. The second one is $4,300 which is the breakout point of the ascending triangle pattern.

Bitcoin Chart

Daily chart of BTC/USD

We realize that there’s a 10% difference between these levels but that figure will become negligible once bitcoin resumes its uptrend.

Bottom Line

Parabolas always implode as shown in the charts above. Bitcoin’s run appears to be in its last leg. Thus, the smart move is to wait for it to fully retrace. The levels are already mapped out for you. All you need to do is execute when the time comes.

 

Disclaimer: The writer owns bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.