Bitcoin USD daily basis
Bitcoin USD Weekly Review: Revisiting the 20'000 area after 82 weeks
The reporting week was characterized by a strong accentuation of the prevailing trend, which ultimately led to a fall below the 20'000 area. The weekly close of the previous week already indicated it with USD 26'545 on Sunday evening: the last defended support zone in the 29'000 area could no longer be held after a good month and thus the way was wide open for a continuation of the bearish trend in the reporting week. As is often the case, Monday also saw the biggest daily loss of the week with a whopping 15.42% drop, resulting in a closing price of USD 22'460. On Tuesday, the market tried to find a new level in a trading range between USD 20'900 and 23'300. A close at USD 22'131 also served as a new landmark on Wednesday, although a low of USD 20'177 was registered during the day. The historically significant 20'000 zone acted like a magnet and so the market already came a step closer to the area again on Thursday at USD 20'816. An unchanged Friday led into a weekend characterized by uncertainty, which was reflected on Saturday with a daily low of USD 17'600. It was only on Sunday that the market managed to stabilize a bit and thus came back above the psychological 20'000 mark.
Difficult bottom finding ends after renewed correction to historic price level
Daily Interval Review
After the mid-March 2020 price plunge, a veritable countermovement established itself. This led to the resistance zones above USD 10'000. After an initial rejection and a consolidation phase of almost two months, a breakthrough through the fundamental resistance zone followed on July 27, 2020, which persisted since August 2019 and accordingly caused Bitcoin to fail several times already.
The area around USD 10'000, which served as resistance, was interesting in several respects. On the one hand, the 0.618 Fibonacci point of the entire downward movement, which was initiated at the end of June 2019 just below USD 14'000, was located in this price area. On the other hand, the zone around USD 10'000 simultaneously acted as a witness of the still bearish trend from lower highs since December 2017 (see macro view on weekly basis). Bitcoin was able to establish itself above the newly created support in the USD 10'000 area since the end of July 2020 and provided the first confirmation of a trend reversal of the bear market that had persisted since 2018 with the break of the resistance zone around USD 12'200 towards the end of October 2020. In the following weeks, the positive trend accentuated and led Bitcoin through the 14'000 resistance in early November 2020 and close to the then all-time highs around USD 20'000 for the first time in early December, which remained untouched for 158 weeks since the bull market in 2017.
With the breakthrough of the old all-time high at USD 20'000, the trend reversal was definitely heralded. Accordingly, there was a strong accentuation of the uptrend, which brought the Bitcoin price to its new all-time high just below USD 65'000 in just over 4 months. However, the rapid upward movement was abruptly halted in mid-May 2020, taking Bitcoin back to the USD 30'000 areas. After a three-month consolidation phase, the upward movement was continued no less spectacularly after a "rounding bottom" in the 0.61 Fibonacci area, which finally ended with a new all-time high at USD 69'000 in October 2020 after a "retest" of the 40'000 zone. Since then, a strong correction phase dominated again, which, after a failed trend reversal attempt in the USD 45'000 area, finally ended below the USD 30'000 zone and even at a good USD 20'000.
Outlook Daily Interval
Just 73 days after reaching an all-time high at USD 69'000, the break of the 40'000 support zone at the end of the previous month suggests a change of course. The bull run, which has lasted over 401 days, seems to be running out of steam. The stabilization in the support area of USD 29'000, which lasted for about a month, was followed by another wave of selling in the reporting week, which led Bitcoin to USD 20'000 and thus into the area of the old all-time high from the end of 2017.
With the break of the 30'000 support zone, the last bastion of the bulls was destroyed. With a defense of this zone, one could still have spoken of a barely intact bull market due to higher lows since the beginning of the bull run as well as a retracement in the 0.618 Fibonacci area.
As suspected, the break of the last support zone quickly led to the historically dominant 20'000 zone. The market is thus back at the beginning of the bull run that originated in November 2020, only 7 months after creating its new all-time high in the 70'000 area. From a technical perspective, the chances of reaching the highs in the near future have thus shrunk to almost zero. The market has turned into a classic bear market and thus a longer consolidation phase in the current area is likely to be initiated.
New price discovery phase leads directly into a bear market
Review Weekly Interval
Bitcoin was able to set a higher high above USD 10'000 for the first time in the weekly interval in 2020, which broke the prevailing bearish trend since December 2017. This broke the series of lower highs that lasted for 135 weeks (1).
Since this first overcoming of the bearish trend, the signs for a valid trend reversal became stronger. With the push through important resistance zones and a continuous development above the 21-week average (2), the probabilities for a renewed reaching of the all-time high created in 2017/18 increased visibly. This scenario was completed in mid-December 2020. This was followed by a strongly accentuated price discovery above this historical zone, which produced a new all-time high of USD 65'000 in mid-April. A consolidation initiated since then ended in a veritable price slide that brought Bitcoin back to the USD 30'000 mark in just two weeks, even below the 21-week average (2) that has defined reliable bull or bear market phases in the past.
However, a subsequent breakout from the 10-week USD 30'000 - 40'000 consolidation area and a subsequent successful "retest" of the upper range of this channel most recently took Bitcoin above the all-time high created in April in an impressive counter-movement. After the creation of the new all-time high in the USD 69'000 area in November 2021, a vehement correction phase set in again, analogous to the pattern observed in May. This initially led to the break of the 50'000 support zone, which then promptly caused a bounce in this area, which now acts as resistance. Since then, a trend of accentuating lower weekly highs and lows has been observed, which is bringing Bitcoin back into the USD 20'000 zone.
Outlook weekly interval
The massive bull phase, which has lasted since July 2021 and originated from the healthy 0.618 Fibonacci area, which has been calculated since the start of the bull market and the all-time high of April, has recently been put to the test. The undershooting of the 40'000 area makes a rapid continued price discovery beyond the 69'000 all-time high a distant prospect for now. The market is setting a slower pace with the risk of falling into a bear market. The failed recapture of the 50'000 area as well as the negative divergence of the RSI indicator underlined the possibility of a weakening trend.
The series of higher lows and highs since October 2020 could not be continued recently, which ultimately ended in a visit to the 20'000 area. The chances for this had increased since the increasing breaks of the support zone below the 30'000 area. The price action in the 30'000 area was a test of the last authoritative support area. Now the area in which the 0.618 Fibonacci zone, which has been calculated since the beginning of the bull market and the all-time high, was undercut, which is close to a bear market confirmation.
The correction since the all-time high occurred promptly and dragged on almost unrestrictedly for 7 months. With the fast reaching of the 20'000 zone, the bull phase lasting over 20 months ended abruptly. Thus, the market is in a stalemate, which makes price recoveries above the level of USD 40'000 appear very unlikely for the time being. On the other hand, further price declines into the 15'000 area are more likely to represent a bottom on a longer scale, as the 200-week average and other long-term indicators are in the current price area. Thus, an expected longer consolidation in this area is likely to be followed by the first seeds of a new bull cycle over the next few months.
In own thing
The CVJ.CH editorial team takes the occasion of reaching a new bitcoin price cycle to discontinue the format of the weekly bitcoin analysis. In the future, a more general market coverage with technical assessments on various crypto assets will follow at this point. In the meantime, you will find recurring market reports including technical analysis as usual in our market commentary section.
We thank all loyal readers of this format and wish you successful trading.
Disclaimer
All information in this publication is provided for general information purposes only. The information provided in this publication does not constitute investment advice and is not intended as such. This publication does not constitute and is not intended as an offer, recommendation or solicitation to invest in any financial instrument, including cryptocurrencies and the like. The contents contained in the publication represent the personal opinions of the respective authors and are not suitable or intended as a basis for decision-making.
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