In 2014, Bitcoin crossed a 'Downwards Trendline'. Which was positive at the time.
In hindsight it was a bull trap. The second half of the multi year bear market ensued. This was indicated by the 20/50 week MA cross over.
Back then, the breakout of the downwards trendline now shows it was a false a period of over optimism. The classic 'return to normal' phase of a bubble. Before fear, panic, capitulation, and finally return to mean.
Question. Are we in a bull trap? The 'Return to normal' of a bubble? Could a similar scenario could play out to 2014? Or have we bounced off the 50 week MA and started a new bull run and already returned to the mean at $6500?
I'm still cautious right now because there are signs of 'return to normal'. People are once again throwing money are the alt coin market. As of writing, EOS has a market cap of $15.7 billion. Is this a sign of bullishness, or are we seeing over optimism like in 2014. Even Bitconnect went up 300% in value. I'm slightly concerned about the Initial Coin Offering bubble and Altcoin bubble we are seeing.
But let's see how things play out. Maybe EOS at $15.7 billion is fantastic value!!
For the bulls, we could have bounced of the 50 week MA and be on our way up. If we go above 11.8 k that would be very strong for the bulls. Not much resistance above those levels.
For the bears, history could repeat and we head lower to the $4800 fib support bear target. $4800 could be the 'Return to mean' price as seen from the trendlines moving up from the previous bull market. If $4800 is the return to mean price, $2500 fib could be capitulation.
I am currently neutral until it's clearer if we are at 'Returned to mean' or 'Return to normal'.
Im going to check back in a few months and see if history repeats, or we are on the way to all time highs.
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The breakout of the downwards trend line turned out to be a Bull Trap.
Traders bought in a got a nice trade to the upside but needed to get out quick. Sometimes TA is just wishful thinking. A lot of twitter traders probably thought the Bull market was back as soon as the line was crossed, but it was only a matter of time before the move failed.
The bubble appears to be still bursting.
We haven't had the 20/50 week death cross yet. But Bitcoin is currently below both averages which is not a good sign.
Trade closed manually
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If you shorted, you could take profits now because we reached the 6k bottom.
in 2014 everybody was thinking that crypto market was a joke. btc at 1k$ was a dream. in 2017 crypto market proved otherwise. the exchanges are at full speed ... i'm sure they are manipulating the market into an artificial recovery forcing it into another bull market. as soon as it starts (artificial or not) it will run on it's own ... first FOMO then media attention and another bubble will be created. with a higher price of btc higher fees for exchanges and huge income.
bitzoo
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@pakardel, Yeah this could help the bull case. I do think exchanges do artificially try to jump start volume so they can get their fees. But I think this could pushed be up or down. I think people still believe BTC is a joke. I went to my financial advisor literally yesterday and he is still laughing at BTC. But to be honest this just made me think I need a new advisor!
christophercolumbus
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Yep, but also try redrawing the downward trendline [from the peak] and you'll see we have not even broken it yet.....
bitzoo
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@christophercolumbus, Yes I see the other trendline on one of my other charts. But I believe this is the one most people were watching which is why I used it here.
henkejo
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Are you holding some bitcoin or are you waiting for some specific sign of confirmation (you noted 11.8k)?
bitzoo
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@henkejo, Not holding. Options I am considering are buying the breakout of the ATH or if there is some big capitulation sub 5000k.