Bitcoin in a Bear Market, $50k was the Bull Trap
I feel that I will start trading again since the market became too predictable. Although the gambling aspect of trading with leverage is what discourages me. Maybe I will just take unleveraged positions but this is also too stressful as high profit requires higher stakes.
After the drop to $43K at the beginning of the month, I wrote that prices were going lower, but they went higher instead to $48k before diving to a new lower low on the 4h chart.
I don’t know why, but the charts are moving slower than I thought, although price action follows certain patterns that we have seen again before. Maybe it has to do with the higher volumes and perhaps there is a lessened effect of bears when they try to crash the market.
Is this chart reminding us of anything?
Since details can’t be the same, the pattern looks like it is in a long bearish term again, with a promising bounce from 30 to 50k but a strong rejection there.
If we look closely there are differences with today’s chart to the scale of the first drop that ended the 2017 bull run. In 2018 Bitcoin went down from its ATH ($20k) by ~70% to 6k. This time in 2021 it went down from 65k to 29k which is roughly 55%. I didn’t calculate the exact percentages but these rough estimates are making sense.
As volumes of cash entering the space are increasing the volatility is reduced. There is always trading and a bounce is going to happen. In this case the rise to $50k for BTC just took too much time, probably a month more.
It seems this is was a bull trap, and maybe we have to wait a couple of months more to know.
The main points are:
- There is a bear market and it doesn’t need an immediate lower low (from the previous 29K low), it can be 32–33K and another bounce up to 40k, but then move down to $25k within months
- The price is moving slower with less volatility and higher volumes
- BTC today finds similar resistance as with in March 2017 and as we will see below in June 2014.
The Bear Market of 2014–2015 lasted longer
When I was studying the charts and trading in 2017–2019, I had similar observations with 2013–2015. The two bear markets lasted about the same, but the bottom lasted for a longer time in 2015. It was a year long accumulation phase but it solidified support and then the 2nd halving helped BTC price escape.
Meanwhile in the previous run, in just April 2019, only a year and four months after the bull run of 2017 ended, Cryptos started rising again mostly because of the Chinese Ponzi Schemes. BTC went up from a $3k low in December 2018 to $14k after 7 months of a mini bull run. This was also rejected and price eventually broke down again below $4k in March 2020 (two years and two months after the previous ATH).
An event like that didn’t happen between 2014–2015. Price was bouncing, but it didn’t escape the bearish pattern. Yet, it escaped the trend in 2019.
Which way we look at the chart, it seems there is programmed cycles that are unavoidable. Money pouring in suddenly and this time it was mostly by institutions.
As it seems about one year from now, BTC price should be right about 25k.
In Conclusion
I’ve expressed my frustrations time and again on the reasons I’m looking at the BTC chart. I’ve also written on noise.cash ( link to post) about the peg to BTC by crypto exchanges due to the BTC trading pairs and the high volumes these trades
Price action doesn’t have to be the same but there is a general trend that has followed the previous halvings. A parabolic bull run that was followed by a rapid crash, a few bouncing, and a final bottom setting at price 75–80% lower.
From 64k down to 20k seems to be in line with the historic price action. Maybe it can even go to 20k but I can’t see any lower than that unless BTC completely losses the game and other cryptocurrencies take over the throne. 20K sounds like a reasonable bottom with this chart action.
There is another scenario, though. The one that most prefer, but I think its time is running out. For this scenario to play out it would have required BTC to immediately bounce. BTC in the past was always entering a bear market after more than 35%. A drop of 50% meant the immediate end in the previous bull runs and very possibly it did the same this time too.
Most will disagree with this analysis, and I’ve previously became bullish this summer but this was probably the bounce and the similar enthusiasm that follows a proper short-term price rally.
To summarize, I will have to write the word “if” since this is just a prediction.
So, if this is a bear market, then 50k was the top of the bull trap. I don’t like it either and I’m not happy in this case but will have to make arrangements that I will not feel comfortable with. The odds are rising as time passes and BTC is getting rejected at critical levels.
I don’t suggest that we are in a bear market with this chart, only pointing to the fact that as time passes the chart begins to resemble the previous bear markets. Although, I may have used a bear in the lead image, and presented a clear bearish case.
Unless, there are some big changes in sentiment, new investors, perhaps a BTC ETF, then the price action is going to follow what the historic charts point to, and as the BTC cycles suggest it will be a time of rebuilding and accumulation. DCA is a fine strategy for the long term.
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Originally published at https://read.cash.
