Crypto-ML The 10K Bitcoin Market Report February 2020

The 10K Bitcoin Market Report: February 2020

After an exciting week, it appears Bitcoin has settled confidently above the $10,000 price level. This move is reinforced by several common moving averages exceeding $10,000 as well. Crossing and maintaining above a 5-digit line makes a strong psychological statement.

The 10K Bitcoin Market Report: February 2020 1
Positive price movement exemplified.

Of course, by writing “settled confidently above the $10,000 price level,” we are almost certainly invoking Murphy’s Law.

So instead, we’ll leave the predictions to our machine learning. This market report will provide some interesting insights for you to consider for the year ahead as we move into late February and what appears to be a reasonably stable bull market.

Mainstream View of Bitcoin in 2020

Since the mainstream acceptance of Bitcoin, both in terms of investment industry and consumer adoption, is critical to sustained growth, it’s important to step outside of the cryptosphere and see how traditional media outlets view cryptocurrency.

This Bloomberg video provides a look at their bullish thoughts for 2020. They also discuss interesting relationships with both gold and Tesla.

Ironically, these analysts focus on RSI, which we argued against doing in this article: Is RSI a Good Technical Indicator for Bitcoin?

The Bitcoin Halving is Coming

In order to ensure scarcity, Bitcoin is designed so that the rewards miners receive drop by 50% at predetermined intervals. As traders and investors, it’s interesting to note that the price of Bitcoin has risen before and after previous halving dates: November 2012 and July 2016.

It (Bitcoin) now has a wider investor potential base than ever, some interesting chart patterns and a catalyst with a strong historical track record. If you haven’t looked at Bitcoin lately, now could be the time.

Tradestation Insights

Bear in mind, there have only been two halving events in the past. To draw any form of significant conclusions from this limited data set would be dangerous.

Rules on Cryptocurrency Transparency

New rules are set to be implemented in the United States, designed to improve transparency, minimize laundering, and hinder other illegal activity carried out via cryptocurrency.

Speaking earlier Wednesday to the Senate Banking Committee, Powell said: “Every major central bank in the world right now is doing a deep dive on digital currencies” and it’s the Fed’s responsibility to be at the forefront of that thinking.

Bloomberg

This will likely be implemented via regulations on exchanges, just as banks and other financials need to follow anti-money laundering practices. Chasing down individual wallets will likely be an insurmountable task.

Regardless of the approach–and regardless of whether privacy-minded crypto advocates agree with it–this increased regulation should help legitimize cryptocurrency in the eyes of both the public and traditional investment firms, thereby increasing demand.

Crypto-ML Signals

The Crypto-ML Market Index has been firmly in the “bull market” territory, with a nice, measured climb.

The 10K Bitcoin Market Report: February 2020 2
Bullish Market Index

Interestingly, it did not dip to an extreme negative reading before reversing. This may imply either that we’re in for a more consistent (less extreme) run ahead.

Our Crypto-ML Trade Signals are currently mixed but have been issuing a number of winning trades in and around this $10K price zone.

The 10K Bitcoin Market Report: February 2020 3
Trades playing the ranges.

Our signals have had a strong 2020, especially with the huge upgrade to our new 4.x model series. But, it’s easy to get great trades on in a strong market. See our Trade History for actual performance.

3rd-Party Technicals for 2020

Similar to our Market Index, the Fear & Greed Index brings in a bunch of data points to determine the current crypto market sentiment. Like the Market Index, you want to see a gradual rise and avoid extreme readings (which tend to precede reversals).

Fear and Greed Index Crypto-ML
The alternative.me Fear & Greed Index

Fortunately, both the Fear and Greed Index and our Market Index are in moderately bullish positions, indicating a reversal is not pending.

What about individual coins? Alt season is back.

Crypto-ML 5-Day Change Barchart
Ethereum is leading the charge. Barchart.com.

While we continue to see a strong correlation across the crypto markets, altcoins are leading as this bull market starts.

Interestingly, a similar situation appeared in Spring of 2017, right before the record run.

Those who were around the cryptocurrency industry in early 2017 should realise that the previous record for falling Bitcoin dominance almost immediately preceded the bull market that saw Bitcoin rise to almost $20,000 and some altcoins having runs of 10,000 percent or more.

NewsBTC.com

In a recent Crypto-ML customer poll, our users voted for us to implement capabilities that would help predict changes in Bitcoin dominance. More to come on that front.

For now, do know that cryptocurrencies are generally highly correlated.

7 Day Correlations Cryptowatch Crypto-ML
Correlations Matrix from Cryptowat.ch

Recommended Reading

Are you looking to stay sharp with your trading? Here’s this month’s recommended reading:

The 10K Bitcoin Market Report: February 2020 4The 10K Bitcoin Market Report: February 2020 5

Principles by Ray Dalio provides an interesting look at trading from a systematic standpoint. Given he is one of the richest men in the world, it’s likely he has a thing or two to teach. This book is not for everyone. And it is very dense. But the first section is particularly exciting for most traders with interest in data and machine learning.

Conclusion

Overall, we appear to be in the midst of a reasonably sustainable bull market.

With our 4.x model release, the Bitcoin Cash and Ethereum models measure the strongest from a statistical standpoint. While all of our models are good, this means the BCH and ETH models are exceptionally good at predicting price changes (at least in the lab).

Given we appear to be in a bullish market with altcoins rising, it may be a good time to consider adjusting your portfolio accordingly.

What are your thoughts on the market? Let us know in the comments below or in our Community Forums.

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