Bitcoin's price action since the May sell-off has drawn many comparisons to blow-off tops of its cyclical Bear Cycles. However as the consolidation since the May 19 low continues, it displays more and more similarities with the late 2019 price action, which was a mini bear phase following the very aggressive rise of April/ May/ June 2019 that was based to a big extend on the 'Libra mania'.
** Similarities with 2019 ** On the 1D time-frame the two sequences (today and late 2019) have one key similarity that stands out. The price was 'squeezed' within the 1D MA50 (blue trend-line) and the 1W MA50 (bold red trend-line) following a 1D Death Cross (when the 1D MA50 crosses below the 1D MA200). The second is that both started trading below a Lower Highs trend-line of a -13o angle. Right now the 1W MA50 is supporting, almost the same way it did in October 2019, and even though it marginally broke in November - December (2019), it was what initiated a strong rebound to the 0.618 Fibonacci retracement.
** The RSI bullish divergence ** The support of the 1W MA50 is key as it is being achieved despite Bitcoin being on Lower Lows (LL) while the 1D RSI is on Higher Lows (HL). This is a Bullish Divergence and was also seen both during October and late Nov - early Dec 2019. This divergence was enough to start the rebound to the 0.618 Fibonacci retracement level.
** Fundamentals took over ** It can be argued that if it wasn't for the 'once in a decade' event of the March 2020 COVID crash, Bitcoin would have extended the rebound past the 0.618 Fib, essentially fully completing the recovery. We can't know that for sure but such an abnormal event should be classified as an anomaly and be taken into consideration as such. We can argue that the May 2021 sell-off wasn't just a technical correction of the very aggressive October 2020 - April 2021 parabolic rise but was also fueled by very negative fundamentals (Tesla, China-miners etc).
Have all the negative fundamentals priced in already? We can't know for sure but if they have, the Bullish Divergence on the 1D RSI definitely shows something.
What do you think? Is this MA50 squeeze about to kick-start a rebound to the 0.618 Fib and if yes has the market digested all the negative fundamentals so that, as opposed to the COVID crash, it can resume the long-term Bull Trend? Feel free to share your work and let me know in the comments section!
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@CrypTrader31, I agree with your analysis. BTC is behaving like it did in 2017:
wvb1
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All of the factors that caused this last bull run are gone: no more stimulus checks, no more Tesla hype, very few enterprises interested in buying.
Traders, some retail, and whales are the only people left. It will more than likely keep the 30k - 40k range until that changes;
which is likely to come in the form of bad news and force the price downwards.
People who expect 100k this year still, who is the buyer?? Banks??? If a bunch of banks started buying BTC I could see it happening... but that is unlikely...
@wvb1, good point. but what about the wide spread adoption? crypto exchanges are reporting something like 5-10x growth in user base and btc is limited supply. is that not enough? the big driver of bitcoin since its inception is the hope that it will some day becoming the world currency. does this look less so than last year?
wvb1
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@simplejoe1, Retail had a lot of extra money from stimulus checks and a lot of free time at home. They are going back to work now, and in most places no more checks. Retail is important but is also skiddish. A regular person puts in 10k at peak and now has 5k, they will probably not be back around for a long while. Many are simply waiting to sell at any higher price if they have not sold already. Check out ICP for a similar interaction. Lots of buy-ins that are waiting to sell = Lots of downward pressure.
Alts are popular among retail. Alts are BTCs slave. They can now buy alts direct with Fiat but can still see there value plummet x factor as BTC goes down.. "I will buy more at the dip" is very common now. I expect to see a dead cat bounce in the 25k range from these holdouts.
Another point: Regs are coming in to block Binance and international platforms. Many local platforms are used to buyin and move coins into international exchanges; because local exchanges suck. If they get what they want and only local exchanges are allowed to operate in Thailand, Japan, UK, we can expect a lot of retail to be locked out from participation in their favorite coins (alts).
There is widespread adoption of many assets, and many assets move up and down, and up and down. BTC is simply returning to a place where more people will want to buy it again.