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The tailwinds that are getting behind the Bitcoin price are arguably the most bullish in its history, yet the market is down. Is it just a matter of time before the next big surge, or has Bitcoin made a market top?
The most favourable phase in Bitcoin’s history
Bitcoin (BTC) is entering a phase where the background political narrative in the US is at its most favourable in the entire history of the king of the cryptocurrencies. In fact, the most influential political and economic power in the world has gone from the most negative period regarding cryptocurrencies, to the most positive in just the space of a few weeks.
Not only is Bitcoin completely accepted, but it is encouraged. How far this encouragement can eventually go is still to be seen, but if early statements are to be believed, the US could swing a huge part of its political weight behind Bitcoin.
Market nervousness still persists
It’s in this kind of climate that there is still some nervousness in the market as to whether Bitcoin will continue to play out the latter stage of its bull market, or whether the top has been reached, and the bear market is about to drag Bitcoin down to the depths once more.
The Fear and Greed Index, which tracks market sentiment, is still very favourable, but it dipped down from Wednesday’s Extreme Greed at 84, down to just Greed on Thursday, at 75.
Retracements are healthy
The U.S. Spot Bitcoin ETFs are continuing to experience net inflows, and it is very likely that MicroStrategy will keep on buying large chunks of Bitcoin every week. The long-term holders are still holding, and therefore it is to be wondered who is selling?
What most investors new to markets need to come to grips with, is that this is how markets work. There will always be downturns, even in the most bullish of times. The market is like a living organism. It breathes in and the market surges - it breathes out and the market falls.
The bears really cannot afford to read too much into what is a standard retracement for Bitcoin. Retracements are good and healthy. They allow the market to regather before going higher. The longer the market continues without a decent retracement, the deeper that retracement will eventually be.
Bearish pattern forming?
Source: TradingView
Looking at the 4-hour chart for $BTC, at first glance it might be wondered if an M pattern is forming in the local price action. If this does indeed play out, a measured move would take the price all the way down to just short of the local low at $89,700. While this might be a scary move, as long as it did not make a lower low, a bounce from there would have the potential to be a strong one.
That said, this kind of deep retracement does not look likely. The Stochastic RSI momentum indicators on the short time frames are bottoming out. The 4-hour is at the bottom (seen in the chart above) and the 8-hour and 12-hour Stochastic RSIs are also there or thereabouts.
Therefore, if there is still some remaining downside price action to come, the horizontal support at $99,500, as well as the descending trendline at the top of the wedge, could provide a safety net.
Weekly concerns still there
Source: TradingView
The weekly view for the Bitcoin price is showing some concerns. After some great looking price action earlier in the week, the recent fall has taken the price down below the very important horizontal resistance at $101,350.
If this is still the case by the close of the weekly candle on Sunday, this would admittedly be quite bearish. However, there are still three days left for the bulls to push the price above, and if the price can close above this resistance, and even better, above the $106,000 resistance, the bulls would remain firmly in control.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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