The recent Bitcoin drawback correction is somewhat similar to its price action in June-December 2019. Bitcoin (BTC) is at the point of reaching the prospects of $47,500-$50,000 based on it’s latest trend which has a weird similarity with the one in June to December 2019.
Bitcoin reached around $14,000 on June 26, 2019 before going lower for the rest of the year on profit-taking sentiment also with the FUD initiated by the Bitcoin Cash hardfork, and standoff of Facebook with regulators over the crypto project Libra. All the while then U.S president Donald Trump and Treasury Secretary Steven Mnuchin’s used a very threatening tone on Bitcoin. The flagship cryptocurrency came down to nearly $6,500 in December 2019. During the process of that it brought about 50-day simple moving average (SMA) to flip below its 200-day SMA which is something the technical chartists call a “death cross” and its formation is seen as a sign of extended sell-offs way ahead.
All the while, the Bitcoin bulls tried to hold down the price above the 50-week SMA and the cryptocurrency’s one day-chart showed bears attempts to bring down the price below its 50-week SMA. Which wasn’t a success as the bulls bought those dips every time. The probable buy actions that happened near the 50-week SMA was later pushed onto a strong upside rebound which reached onto the 61.8% Fib level which then added up to a dropdown Fibonacci retracement graph created from around the $14,000-swing high to approximately the $6,500-swing low. The 2019 fractal depicted at least two bullish divergence scenarios. Where in the first the Bitcoin price formed into lower lows while its daily relative strength indicator and the price-momentum oscillator created lower highs. This showed a slight moment of weakness in the winning bearish momentum and as a result the price took off later.
During 2021, Bitcoin almost re-created the 2019 scenario during the mid-half. At the initial stage, the cryptocurrency’s correction from its record high of nearly $65,000 reached at BTC/USD at the same time as the 50-week SMA support around 30,000. Nevertheless, the lower move enabled a death cross setup. Bitcoin’s price action during the last week also pointed at a bullish divergence scenario. According to TradingShot, a market analytics program a bullish divergence formation, together with a rebound from the 50-week SMA support would be able to send Bitcoin prices to the 61.8% Fib level of the current top-to-bottom Fibonacci retracement graph. “The support of the 1W MA50 is key as it is being achieved despite Bitcoin being on Lower Lows (LL) while the 1D RSI is on higher Lows (Hl),” He explained. In a recent chart that was presented it showcased how the TradingShot had the 61.8% Fib level appeared near $47,500. All the while, another chart presented the profit target near $50,000.
This shows that Bitcoin is closed at its second quarter at a 41% loss which apparently is the worst decline seen since the 43% sell-off in the fourth quarter of 2018. The recent drop at cryptocurrency’s gave off signal from a bunch of negative fundamentals which also had China’s crackdown on the crypto industry with the global regulators trying to increase their scrutiny all with a combination of anti-Bitcoin tweets by Elon Musk. There has been a strong demand for Bitcoin right after the decline by the Federal Reserve’s hawkish tone. Recently, the U.S Central bank announced that it might increase its benchmark interest rates by the end of 2023 to restraint cost pulling pressures which is colliding with a BTC/USD rate dive on June 16 and afterwards too.
Even with really strong energy Bitcoin has somehow managed to rise above the $30,000 which is a psychological support level and it is at the present moment above $35,000. Nevertheless, the equally powerful resistance level at $40,000 Is keeping the Cryptocurrency’s short-term bearish bias unharmed and whole. “One expects that the longer we go without a $40,000-handle, eventually support is going to crumble and give away to a sharp move towards $20,000,” Fawad Razaqzada an Analyst at ThinkMarkets, spoke to the Wall Street Journal, depicting that all of this leaves Bitcoin at an intersection in the third quarter. Therefore, the TradingShot asks “Have all the negative fundamentals priced in already? We can’t know for sure but if they have, the Bullish Divergence on the 1D RSI definitely shows something.”