Anatomy of the Bitcoin Price Pattern

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Welcome crypto enthusiasts! I hope you are all having a great weekend, and for those who are celebrating the Labor Day holiday it is a long weekend! What could be better? Right!
So, what could be better? A new crypto bull market would be nice! I am not just talking about the three temporary rebounds we have seen over the last 7 months, I am talking about a real deal bull market that will take BTC and other cryptos to new all-time highs.

So, after bottoming on August 14th at just over $5858 Bitcoin has been trending upward ever since, but is this just another temporary rebound or something more? My personal feeling is that the crypto markets aren’t quite ready for a new bull market, in my opinion there needs to be a period of consolidation before the next bull market begins. As I have said before I believe that this correction process is going to take more time, most likely a few more months before the market is ready for a real sustained bull market. Honestly, I would love to be wrong, nothing would make me happier than to see new all-time highs soon, but I just don’t feel that it will happen.

For this week’s Bitcoin chart, I am taking a long-term view at Bitcoins price action. The first thing that stuck out to me is how volatile the price action was just before and after the peak in December and how it has been smoothing out ever since. It reminds me of how when you drop a ball at first there is a lot of energy and you get a nice high bounce the first time but then every time the ball contacts the floor it loses energy making each additional bounce smaller and smaller.

In my opinion this Bitcoin price action is very natural, after building up so much energy climbing to nearly $20,000 that energy was transferred to the subsequent fall to $6000. It happened with such energy and momentum that once the price collided with the strong support near $6000 it caused a quick reversal (V bottom) and the energy was transferred to the rebound. Of course, the collision with support caused an energy loss the same as a ball so naturally the rebound did not reach the original height. You can then see that each additional bounce is smaller, again just like a ball. Also notice that on average the daily candles are much shorter now then they were leading up to the peak and for several months afterward. You can also see this reflected in the MACD , the signals are very erratic during December, January and February but then they smooth out as time goes on.

So obviously Bitcoin is not a ball so what would explain this similar reaction. I believe it has to do with market sentiment, after the first quick drop there were many people who were very eager to jump in, especially people who missed the first ride up to $20,000. Their belief was most likely that there would be a quick bounce and BTC would run to new highs over $20,000. In my opinion this is what caused the first very quick "V" bottom recovery, but instead of soaring over $20,000 it failed at just under $12,000 when the buying dried up and dropped back down again near $6000. For the next bounce there were plenty of buyers near $6000 but fewer people believing that BTC was going to recover quickly and soar so the bounce was not as quick and buyers dried up at even a lower price, this time BTC never even made it above $10,000. I think the same thing happened for each additional bounce, each time there were buyers down near $6000 but fewer and fewer people willing to jump in and buy BTC at higher prices, causing the bounces to get smaller and smaller.

My point with all of this is that I believe we still have a few bounces left to go before the crypto markets climb their way to new all-time highs. Of course, as I said I could be wrong, so I will be watching Bitcoin and other cryptocurrencies closely for clues that would convince me that a new bull market has begun. The first clue I will be watching for will be if BTC can push above the daily 200 SMA , it has been below it since the middle of March.
If we go back and look at the 2013 to 2016 boom and correction cycle you will see that it was only after BTC was able to push and stay above the 200 SMA that it was able to enter a sustained bull market. I believe this will be the strongest clue that the correction is over, and a new bull market is just around the corner. Other clues I will be watching for are growing volumes, since bottoming in June the volume has increased each month since which is a good start. I will also be watching for back to back monthly closes higher than the last, that has also not happened since the peak in December.

I should also add that I am not totally convinced that BTC has hit bottom, although BTC has bounced convincingly several times from just under $6000 the possibility still exists that it could go lower. It is possible the uptrend we are witnessing now could reverse and this time the price not bounce as it has in the past but instead drop lower creating a new low for the year. As I have said I believe that this correction process still has a way to go but If BTC was to drop substantially below $6000 then my opinion would be that we are in store for a very long wait for the next bull market.

Anyway, I hate to end on a negative note but that's all I have for now. Thank you for checking out my charts and have a great weekend!

hdon94 sykXBT
@sykXBT, I would love that! Thanks for sharing your chart.
v good ty for sharing
hdon94 Mdotee.
@Mdotee., Thank you! I appreciate you taking the time to check it out!
THANK YOU!!! Another person that agrees that Bitcoin is not ready for bull run and 6k is not a bottom. A official average bottom is $1100 a BitCoin. We May get some braking down at $2500 because the train has to begin to start braking and slowing down for a ultimate reversal bull market.
hdon94 AlphonsoElliottJr.
@AlphonsoElliottJr., You're welcome! A bottom near $1100 is a little lower than what I have been thinking, but not by much. I published a chart back in March in which I showed a possible bottom in the $2000 to $4000 area.

I appreciate you taking the time to check out my chart! P.S. I would LOVE to buy BTC near $1000!
@hdon94, I think we will see btc at $4000-4500 before a rebound/bull market can start again. So far we are bleeding slowly with occasional pumps. The only reason people are so bullish right now is because we just had 2 weeks of green after months of red. We are probably in the ascending side of a descending triangle.
hdon94 manjotsbajwa
@manjotsbajwa, I agree, even though I would love to see a strong crypto bull market soon I don't believe that will happen. I think we still have some more pain and boredom to put up with before we are rewarded.

I published this analysis back in March in which I stated that I thought it was very possible for BTC to bottom in the $2000 to $4000 area. Thanks for the comment!
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