Okay, well that wasn't much fun! After showing a lot of weakness and being stuck in a downtrend ever since setting a new all-time high on April 14th, the bottom fell out of bitcoins price. Bitcoin broke through support at around $42k yesterday then early this morning the $39k support level was broken, what followed can only be described as mass capitulation. Bitcoins price plummeted over $8000 in less than an hour, bottoming (for now) at around $30k. The plunge was followed by a bounce of almost $13k, bitcoins price peaked at almost $43k and has been slowly drifting lower ever since. I have to say that in all my years watching various markets I have never seen anything that comes close to how crazy that was. So now we are left with a whole lot of questions. Was that the bottom and does bitcoin go up from here to new all-time highs? Is the bull market over? Are we now looking at a multi-year bear market?
Bitcoin 4-hour Chart
Looking at the 4-hour chart you can see just how huge of a drop bitcoin just went through and the bounce that followed. As I am writing this bitcoin is struggling to push above the 21 EMA and also with the resistance at $42k which was support but flipped to resistance as soon as BTC dropped below it. You can also see just how much work there will be for bitcoin to get back up near $60k. Obviously, with all of the craziness, it is going to take a few days for the market to settle down and see just how much damage if any has been done.
Bitcoin Daily Chart
Looking at the daily chart you can see how the support that stopped the January correction is right where bitcoin bounced, the weekly 50 EMA was there also and probably also helped. Right now bitcoin is still below all daily moving averages and is currently struggling with the 200 EMA.
Bitcoin Weekly Chart
Looking at the weekly chart you can see the magnitude of the drop over the last 2 weeks. Looking to the left you can see the January correction and you can also see that level is where bitcoin found support and bounced. Bitcoin is still below the 21 EMA if it can push higher and close above the 21 EMA in my opinion that would be a very good sign that this bull market is still intact.
So, moving forward it will be interesting to see where this market goes from here. I know I have said this before but especially now this bull market reminds me of the 2013 bull market. The biggest difference is that in 2013 the correction happened while bitcoin was still in a steep uptrend and this correction happened after bitcoin had been in a consolidation phase for a couple of months.
Bitcoin 2013 Daily Chart
The daily chart above shows a period of the 2013 bull market. Bitcoin had made a run of over 1800% up to the peak on April 10th when the market became very unstable and over the next week bitcoin lost over 80% of its value from the peak, on the 11th alone bitcoins price dropped 65%.
Bitcoin Daily Chart - 2013 Bull Market
After bouncing bitcoin consolidated over a period of about 6 months before finally pushing higher. Once bitcoin set a new all-time high on November 7th it went parabolic and within 23 days peaked for an increase of over 1800% from the lows of the correction.
If this correction hasn't damaged this market so badly that it goes into a bear market, then I believe we could see something similar to the 2013 bull market. Most likely bitcoin would enter a period of consolidation which could last for a few weeks or possibly even longer. After that, we could then see bitcoin resume the bull market and push higher until finally reaching the ultimate peak of this market cycle.
Bitcoin has made a very nice bounce so far but it is still too early to know if this is just a snapback from an extreme sell-off, or if this will turn into a real recovery and the bull market will resume.
This bull market so far has been wild, if it continues I can't even imagine what lies ahead.
Take care!
BigskyCrypto
info@bigskycrypto.com