Bitcoin Fractal 2019
In detail, Bitcoin topped around $ 14,000 on June 26, 2019, before declining for the rest of the year on profit-taking sentiment, and as well as FUD triggered by the Bitcoin Cash hardfork, Facebook’s deadlock. with regulators on its crypto project Libra, then the threatening tone of US President Donald Trump and Treasury Secretary Steven Mnuchin on Bitcoin.
The flagship cryptocurrency crashed to nearly $ 6,500 in December 2019. In doing so, it prompted its 50-day simple moving average (SMA) to drop below its 200-day SMA, a phenomenon that Technical chartists call it a “death cross” and see its formation as a sign of extended sales to come.
But, at the same time, Bitcoin bulls have kept the price above the 50 week SMA. The cryptocurrency’s one-day chart showed the bears’ attempts to drop the price below its 50-week SMA. But the bulls have bought these dips every time.
Deliberate buying actions near the 50 week SMA then led to a strong bullish rebound to the 61.8% Fib level which was a rolling Fibonacci retracement chart, drawn from around $ 14,000 at a lower than $ 6,500.
The 2019 fractal also illustrated at least two bullish divergence scenarios, in which the price of Bitcoin formed lower lows while its daily relative strength indicator, a price-momentum oscillator, hit lower highs. He hinted at weakness in the prevailing bearish momentum. And as it turned out, the price shot up later.
In 2021, Bitcoin reconstructed the 2019 scenario halfway. At first, the cryptocurrency’s correction from its all-time high of nearly $ 65,000 landed BTC / USD just at the same 50-week SMA support around $ 30,000. At the same time, its lower movement allowed for a death cross configuration.
Bitcoin’s price action over the past week has also hinted at a bullish divergence scenario, as seen in the chart below.
TradingShot, a market analysis platform, noted that a bullish divergence formation, coupled with a 50-week SMA support rebound, could send Bitcoin prices back to the 61.8% Fib level of the top to bottom Fibonacci retracement chart.
“Support for the 1W MA50 is essential because it is achieved despite the fact that Bitcoin is on lower lows (LL) while the 1D RSI is on higher lows (HL),” he explained.
“This is a bullish divergence and was also seen in October and late November-early December 2019. This divergence was enough to initiate the rebound towards the Fibonacci retracement level of 0.618. “
In a chart provided by TradingShot, the 61.8% Fib level appeared near $ 47,500. Meanwhile, the other chart above showed a profit target close to $ 50,000.
The statements emerged as Bitcoin closed its second quarter with a loss of 41%, recording its worst declines since selling 43% in the fourth quarter of 2018. The recent cryptocurrency drop was inspired by a wave negative fundamentals, including China’s crackdown on the crypto industry, global regulators stepping up their oversight, as well as Elon Musk’s anti-Bitcoin tweets.
Meanwhile, demand for Bitcoin has also declined following the hawkish tone of the Federal Reserve. The US central bank has announced that it may raise benchmark interest rates by the end of 2023 to curb inflationary pressures, coinciding with a fall in BTC / USD rates on June 16 and thereafter.
Despite strong headwinds, Bitcoin has managed to float above $ 30,000, a psychological support level, and is currently back above $ 35,000. However, the equally high resistance level at $ 40,000 keeps the cryptocurrency’s short-term bearish bias intact.
“It is expected that the further we go without a handful of $ 40,000, the support will eventually collapse and give way to a sharp move towards $ 20,000,” Fawad Razaqzada, analyst at ThinkMarkets, said in the report. Wall Street Journal, noting that it leaves Bitcoin at a crossroads in the third quarter.
“Have all the negative fundamentals already been integrated? We can’t know for sure, but if they did, the bullish divergence on the 1D RSI is certainly showing something. “
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