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!
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.
2019 vs 2023: A Comparison
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.
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.
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
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.
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.
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.