Will Bitcoin Break 6k in the Coming Weeks?

Cryptocurrencies and the US Stock market took a hit last week with the S&P 500 declining to a low of $2,728 on Thursday, then rallying to $2,767 on Friday. Although Bitcoin has exhibited stability over the past few weeks, it fell to a low of $6030 and has now risen to the $6,400 level. It is uncertain where the stock market will move throughout the coming months as some are expecting a correction of some kind. The magnitude of a hypothetical correction is yet to be seen, and for the most part, the mainstream media is not concerned. After all, it is not a bad time to take profit in the stock market as CEOs and company executives have been selling their personal shares at a record rate which has not been seen in 10 years.

According to technical analysis, Bitcoin has been traveling in a descending triangle formation for the last several months. A descending triangle formation is created by a series of lower-highs, meaning they cannot break above the previous highs of the last impulse wave. The volatility in Bitcoin has seen a decrease throughout this triangle formation, however this tension is building up to the point in which Bitcoin cannot be squeezed anymore. Furthermore, there will inevitably be a large move in one direction or another. According to classical charting, descending triangles are more likely to break to the downside, as ascending triangles are more likely to move to the upside. Currently, there is a lack of upwards momentum based on the previous series of lower highs.

Bitcoin’s RSI is not oversold as it remains around the 45 level. Also, it is very unsettling to examine Bitcoin’s price if it hypothetically breaks the support level of $5,700. This is primarily because there is no historical support between the range of $5,700 and $4,600. Consequently, this range is likely to be volatile, which will provide immense opportunity for talented traders, ultimately separating the professionals from the amateurs. In the meantime, a steady downtrend may be opportunistic for short positions.

Price is not always the best metric to measure the success of Bitcoin considering it is still highly speculative. Although price has crashed since the last bull market, the 2017 bubble brought mass media attention which Bitcoin had never experienced before, and as a result millions of people from all over the world were exposed to this technology. The fundamentals of scaling Bitcoin and providing mass adoption will further develop over time. One could argue that a trader can be just as profitable in a bear market, than in a bull market. Admittedly, it is much easier to make money in a bull market, but the opportunity for shorts in a bear market can be tremendously lucrative relative to other markets in the world.

Below are two charts from a trader who was comparing the 2014 bear market with our current bear market. According to this analysis, if the current bear market were to mimic the 2014 market cycle, the absolute bottom could be in the range of $3,000.

This scenario is possibly the most bearish outlook on Bitcoin. The crash of 2014 was significantly more catastrophic than the crash of 2018 because the hack of Mt Gox, the world’s largest cryptocurrency exchange at the time, lost all user funds. This $3,000 scenario is not out of the realm of possibility. Therefore, it should still be considered. For now, we are still in a descending triangle formation which is more likely to break to the downside in the coming weeks.

Disclaimer: I am not a financial advisor, this is not financial advice. Please do your own research and make objective decisions. This article is intended to educate readers on the possible bull trap in Bitcoin. Disclosure: the author of the article owns cryptocurrency.

Additional Sources:
TradingView.com

CryptoKirbyTrading

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