The price of Bitcoin (BTC) rebounded last week, ending a likely consolidation move that had lasted nearly a month.
However, BTC has not yet broken through the key downward resistance line. This is necessary to confirm a bullish trend reversal.
Comparing BTC dynamics with the previous cycle
BTC’s current decline since hitting an all-time high in November 2021 bears interesting similarities to the decline from its 2017 high. In both Bitcoin cycles, the lows were reached after 12 months. In addition, they were marked by a temporary decline in the RSI index below 50 (green circle) before a subsequent rise above 50.
In the previous cycle, BTC price launched a 340% upward movement (green) that lasted for 180 days. After that, it corrected by 70% within 270 days before the start of the next cycle. The price never closed below the long-term horizontal support at $6,500.
In the current cycle, the price of Bitcoin began a much smoother upward movement, strengthening by 100% in 240 days and reaching a 2023 high of $31,800 in July.
If the cycle follows the same trajectory as the previous one, then the price of BTC will be adjusted until the end of the year. This may be facilitated by FTX’s plans to liquidate $560 million worth of bitcoins. However, since the growth was smoother, it is possible that the correction will be the same. A decline to the nearest long-term horizontal support would mean the price would fall another 25%.
Bitcoin: rebound after bullish divergence
The technical daily chart is giving mixed signals. This is due to bearish price dynamics against the backdrop of a relatively bullish RSI.
Price dynamics show that the price of BTC reached a yearly high of $31,800 on July 13, but has been declining since then. This decline occurred inside a descending resistance line. On August 14, Bitcoin rolled back from it (red icon). Although the price rebounded after this, it never reached the resistance line (red circle). This means that the bulls were not strong enough to develop a rebound.
If BTC makes a bullish breakout of this line, it could reach the next resistance level at $29,200. This resistance area is 10% above the current price. On the downside, failure to sustain gains could result in an 8% drop to the .618 Fib retracement level at $24,300.
The daily RSI gives mostly bullish signals. Although the index has not yet risen above 50, it is growing noticeably. Moreover, it formed a bullish divergence. It occurs when a decrease in price is accompanied by an increase in momentum. This often leads to sharp upward movements, as has been the case with BTC so far. As a result, the RSI supports the possibility of a bullish breakout eventually.
Thus, the future forecast for BTC will most likely depend on whether the price breaks through the resistance line or bounces off it. In the first case, an increase of 8% is possible, in the second – a fall of 10%.
Latest cryptocurrency news, analytics and forecasts – all the most interesting in our Telegram channel. Subscribe so you don’t miss anything important.
All information contained on our website is published on the principles of good faith and objectivity, and for informational purposes only. The reader bears full responsibility for any actions he takes on the basis of the information received on our website.