Bitcoin price action is fickle lately, moving mostly sideways with a number of unsuccessful breakout attempts. The fact that $30,000 simply won’t break brings back memories of bear market support at $6,000 – which after a full year finally broke down to the real bottom.
The leading cryptocurrency by market cap did something similar after the June 2019 peak, settling in around late December, but then sweeping lows with Black Thursday before finally moving higher. Could these clues help build a case for a false bottom currently forming in Bitcoin?
The last four years of Bitcoin price action have been a rollercoaster, and among the wildest ones ever. A speedy rise from under $1,000 to more than $20,000 capped off the 2017 rally, and sent all of the crypto market in the troughs of a bear phase.
Price action grinded for months on end against the same support, but decreasingly lower highs – a signal of a downtrend. A lower low was finally formed in late November 2018, when Bitcoin broke down to its bear market bottom.
Related Reading | Analyzing The Critical Bitcoin June 2021 Monthly Close
From there, news about a potential Facebook-led cryptocurrency and the Bakkt cryptocurrency exchange drove the bullish narrative – and with it prices toward $14,000.
After the rejection, Bitcoin price action hovered sideways for another several months forming yet another false bottom. An early 2020 rally broke the downtrend, but again a false bottom gave way when all of crypto crashed on Black Thursday.
Will the pattern of false bottoms finally end? | Source: BTCUSD on TradingView.com
Bitcoin has once again found itself trading sideways, grinding against support that so far cannot be broken. Weeks worth of attempts have failed, and bears barely got a taste of below $30,000.
But that taste has bears salivating for more, and it is up to bulls to make sure Bitcoin doesn’t get there. The only problem is, the weekly Relative Strength Index has fallen to the level where in the past acted as the so-called ‘false bottom.’
Related Reading | Bull Signal From Bitcoin Bottom Is Best Hope Yet For Continuation
When this phony bottom holds and a bounce follows, the rejection picks up enough momentum to get back through on the next attempt. The pattern fits the bill of an ABC correction, where the C wave is always lower than the initial correction A wave. B wave is in the opposite direction of the correction and may or may not have happened yet.
Will Bitcoin take another plunge through support eventually? What the cryptocurrency has on its side, is hope, and a rising trend line on the same Relative Strength Index. You can read the bullish take here.
Follow @TonySpilotro on Twitter or via the TonyTrades Telegram. Content is educational and should not be considered investment advice.
Featured image from iStockPhotos, Charts from TradingView.com
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