Bitcoin and a range of big Blockchain stocks have definitely taken a turn for the better this year after a severe bearmarket from late ‘21 to late ‘22 and the technical evidence suggests that they are still in the early stages of a bullmarket phase that has some way to run.
We’ll start by looking at Bitcoin itself on its 3-year chart on which we see that, following a quite severe bearmarket it began a basing process back last Summer, although it didn’t actually hit bottom until last November. It then rose sharply in January but this move still did not get it clear of the base pattern whose upper boundary was at $25,000. What was going on was that Bitcoin was marking out a Head-and-Shoulders bottom which is why it dipped back into March to mark out the Right Shoulder of the pattern and to allow time for its moving averages to swing into better alignment. Following this dip it quickly turned and rallied sharply to break above the $25,000 level in March and in so doing broke clear out of the base pattern to begin and new bullmarket.
On the 7-month chart we can see recent action in much more detail and in particular how the the advance away from the lows has taken the form of an orderly more or less parallel uptrend. The pattern that has formed following the sharp rally in March looks like a consolidation pattern within the uptrend that has served to allow time for the earlier overbought condition to unwind, a view that is supported by the way that volume has died back in a bullish manner and the Accumulation line has remained buoyant. This and the fact that the price got close to the lower rail of the channel suggests that a new upleg is likely soon – and it may have started with Friday’s sharp gain.
Many larger Blockchain stocks move slavishly with the Bitcoin price so it is no surprise that most of their charts are looking positive at this time too. One that is of particular interest now is Hut8 Mining, firstly because after being stuck in a large base pattern since last June as we can see on its 3-year chart, it looks very close to breaking out of it into a major new bullmarket, and even on this longer-term chart we can see that the latter part of the base pattern has taken the form of a Cup and Handle base. The other reason that it is of interest now – and this may be the catalyst that gets it moving – is that
it is in the process of merging with US Bitcoin Corp and the giant company that results from this will be worth about $950 million.
On the 7-month chart for Hut8 Mining we can see the Cup & Handle base in much more detail and how close it may be to breaking out of it, although the boundaries of this pattern are not rigid and might require adjusting later, for example if it takes somewhat longer to break out than expected.
Other Blockchain stocks that are looking similarly attractive at this juncture include Hive Blockchain. Hive’s 7-month chart is looking remarkably similar to Hut8’s chart, with the price looking set to break out of another Cup & Handle base….
Meanwhile, Marathon Digital Holdings already broke out of a different shaped Cup & Handle base in April and has since been consolidating this breakout perched on support at the top of the base pattern, which has allowed time for the earlier overbought condition to completely unwind and for the 50-day moving average to catch up and cross over the 200-day, which it is now doing, which is bullish.
Finally, we come to Riot Blockchain, which is already an established bullmarket and is advancing steadily within a vigorous parrallel uptrend channel. Over the past 6 weeks or so it has been consolidating within this channel following the second strong upleg this year which has allowed time for the earlier heavily overbought condition to unwind and for the 50-day moving average to catch up so that it is now well positioned to begin another strong upleg.
End of article. Note that there may be some additions or improvements to this article later. Let me know if you are aware of any good larger Blockchains that you think of worthy of inclusion here at clivemaund@protonmail.com.
Posted at 10.35 am EDT on 29th May 23.