- Bullish vs Bearish - 20%20%
- Probability - 75%75%
Bitcoin is currently hovering below critical support turned resistance level around $3500. Over the last several days Bitcoin has consolidate in the sub $3450 area with no imminent direction indication on smaller time frames. However, the weekly shows a more clear direction of the current price action trend that might lead to further downside.
If Bitcoin closes the weekly below $3500, we are very likely to see further breakdown and at least a retest of the 2018 lows at $3150-$3200. What’s going to be interesting to see is whether this level holds and forms a double bottom, commonly perceived as a reversal indicator. We are not convinced that a double bottom has a high probability of forming given the liquidity that lies below $3000.
After Bitcoin dropped from $6000 to as low as $3150, price action ranged up to $4300 and has stayed in this range for almost two months now. If Bitcoin breaks 2018 lows at $3150, anything in the $2400-2800 range becomes a likely possibility.
The indicator that will have the largest impact on whether Bitcoin bounces of $3200 and forms a double bottom will be volume. If the volume is less than the volume of the bounce at $3200 then we are very likely to see new lows.
We are entering a point of Bitcoin price action where you’re going to generate more alpha by being bullish than bearish. However, Bitcoin is yet to show clear reversal signs and the probability of new lows is still quite high. If you’re not a leverage trader, you’re better off waiting this period out until Bitcoin consolidates longer or registers new lows since the 2017 peak of $20,000.