2019 vs 2023: Analyzing The Market Structures
Trading Analysis

2019 vs 2023: Analyzing The Market Structures

Created 1yr ago, last updated 1yr ago

As the market went up, many traders were quick to notice the similarities between the 2019 and 2023 chart patterns. But are they correct? Let's find out!

2019 vs 2023: Analyzing The Market Structures

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The crypto market started 2023 on a bullish note — Bitcoin went up by almost 40%, while many altcoins experienced over 100% gain in value. In today’s article, we will compare the current Bitcoin price action to the one back in 2019. Let’s dive in!

2023 is off to a good start. After Bitcoin printed the January low just hours into 2023, a 45% rally followed, making up for the crash caused by FTX’s bankruptcy in November 2022.

Some seasoned crypto traders were quick to notice the similarities between the recent rally and 2019’s bear market rally, coming up with various comparisons and price predictions for the weeks to come. Let’s dive into the similarities and look at a few potential targets.

2019 vs 2023: A Comparison

One can find many similarities by looking at the previous bear market bottom and the current cycle lows. In both cases, the market spent multiple months consolidating above a key level before having a violent correction.

In 2019, the final crash cut the Bitcoin price in half, pushing the price down to just above $3,000 per BTC. The crash in November 2022 was less severe, where Bitcoin found support just above $15,000.

After both crashes, the price took some time to consolidate and took off in a fashion we normally only see in strong bull markets: near-vertical price action with no retests. The chart below shows the two different market bottoms - can you see the similarities in both patterns?

Twitter user, CryptoHornHairs, went into greater detail to show the similarities between the current rally and the one in 2019, marking out the different stages of price action in different colors. As you can tell, this move is playing out in a similar manner, even on a detailed level.

Potential Price Targets

We know both rallies have similarities, but where does that put us in terms of price targets? Let’s have a look!

Scenario 1: A Similar Percentage Increase

The easiest way to compare both rallies is by measuring the price increase from the 2019 bottom to the top that followed. As you can see in the chart below, the price made a 324% gain from the lows, bringing Bitcoin’s value all the way to $13,900.

If we are currently in a rally of the same percentage, Bitcoin would be incredibly close to its all-time highs just a few months from now (do your own research!). At that point, it would hardly be a bear market rally anymore, and we would likely see new all-time highs. Perhaps an overly optimistic scenario, but one worth mentioning, nonetheless.

Alternatively, we could take into account the fact that the final flush that preceded 2019’s rally was of a larger magnitude than the recent FTX-fuelled flush, having an impact on the price that was twice as high. If we take that information into account, and, therefore, also consider only half of the percentage increase, the bear market rally would peak at approximately $42,000 (not financial advice).

Scenario 2: Using Fibonacci Retracements

As you can see in the earlier chart, the 2019 rally peaked at the 0.618 Fibonacci retracement, taken from the bear market peak to the lows at $3,000. If we place the retracement tool on our current bear market peak and low, it suggests a bear market rally leading us to approximately $48,000, a level that happens to coincide with a relevant support & resistance level as well. Admittedly, this is still an ambitious price target, but we consider it more realistic than a rally straight to all-time highs.

Scenario 3: A Similar Price-Wise Increase

In scenario 1, we considered only the percentage increase, but what if Bitcoin goes to mimic the rally in dollar value? 2019’s rally saw Bitcoin climb from $3,000 to $13,900, an increase of $10,900.

If Bitcoin repeats its move price-wise, we are already getting close to the peak of this bear market rally, at $26,200. This seems like a reasonable target, judging from the price action over the past few days.

Taking another close look at 2019’s charts and relevant indicators, it can be seen that Bitcoin made a $8,500 move after breaking the 200-day exponential moving average. A similar price increase from the current break of the same moving averages would push prices right to the 2021 price floor, i.e., $30,000 – a huge level to break!

This level did not have much importance in 2019’s bear market rally but did play a big role in the correction that followed. 2018’s price floor was also a critical area from where prices bounced before the famous COVID correction in 2020. All in all, we can conclude that bear market price floors can play a big role in the coming years.

Closing Thoughts

All in all, all these different scenarios have merit, though one may have more than the other. We believe traders should prepare for different scenarios but be wary of getting overly fixated on any of them. Furthermore, macroeconomic conditions, the Fed's actions and traditional financial markets plays a large role in influencing the overall crypto market, which may render this comparison invalid.

For now, it will be interesting to see the price action unfold over the coming weeks, especially if we make it to that $30,000 level. The way the market reacts to that area will likely paint the picture for the months that follow.

We wish you the best of luck navigating the coming months, and happy trading!

Writer’s Disclaimer: This article is based on my limited knowledge and experience. It has been written for educational purposes. It should not be construed as advice in any shape or form. Please do your own research.

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