Bitcoin is a popular choice for investors. Market participants believe that bitcoin prices will fall below $30,000 due to the continuing weakness of the largest cryptocurrency by market capital. All eyes are on the massive “bear flag,” but could it instead be a bear trap?
The Bitcoin price is continuing to climb along the ten-decade-old parabolic trendline that has seen several long-term bottoms in the past. Let’s take a look at the trend line BTCUSD has to maintain for parabolic momentum. We will also discuss what this could signify if it breaks.
A base 4 of the Parabolic Bull Trend is Unbroken for a Decade
Ask around and you will find many people who can explain why Bitcoin has a sub-$30,000 target. The price of Bitcoin is currently slipping along an equilateral support line, which has been proving to be the lowest in the past decade.
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In late 2017, cryptocurrency was a well-known name due to its parabolic rally, which ultimately ended in a collapse and saw the price per coin drop to $3,000. You can see the progress of the base-building with the retest on Black Thursday.
Attention, base 4. Attention, base 4. Source: BTCUSD on TradingView.com | Source: BTCUSD on TradingView.com
The parabolic curve pattern and the curving trend line over the past decade suggest that base 4 could be near completion. Between base 3 and base 4, the parabolic asset – BTC in this case – doubles in value in a very short time.
The Bitcoin price increased six- to twelvefold between late 2020 and April 2021 during the period from base 3 up to base 4. This diagram shows that base 4 can also be quite steep and allows price to rise dramatically. Problem is that this last base could be invalid and suggest the end for this 10-year-old bull trend.
A breach of a parabolic trendline could cause the market capitalization’s top cryptocurrency to plummet as high as 80%, depending on its highest levels. In the past, bear markets saw more than 84% drops from top to bottom. Parabolic rallies also tend to break down faster than it took to climb – similar to a rollercoaster’s anxiety-inducing ascent, followed by a speedy plunge and the ride is over until you decide to get on once again.
“Bulls take the stairs, bears take the elevator”
Source: Glassnode| Source: Glassnode
On-Chain Signals Support Bitcoin Bottom At Current Levels
Similar signs of accumulation can be seen on-chain, such as entity-adjusted donmancy flow and other instances when Bitcoin has reached a major bottom. These on-chain bottoms were all made just as Bitcoin’s price hit the parabolic trend line.
Related Reading| Crypto Mimics Textbook Market Sentiment Cycle, What Happens When Confidence Returns?
Is this just a coincidence or more evidence that the parabolic trendline holds? A new base has been built and the final phase in the Bitcoin rally is about to begin.
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Featured Image from iStockPhoto. Charts from TradingView.com
