Bitcoin price action has been inconsistent lately. It is moving mostly sideways, with a few unsuccessful breakout attempts. It is easy to recall bear market support of $6,000 that didn't work and which, after nearly a year, finally gave way.
After the June 2019 peak, the market leader in the cryptocurrency market cap did something similar. It settled in late December and then fell to sweeping lows with Black Friday before moving higher. These clues could help to prove that Bitcoin is at a false bottom.
Bear Marketplace, Bakkt, and the Black Thursday Drop
The past four years of Bitcoin price action were a rollercoaster ride, and one of the wildest. The 2017 rally was capped by a rapid rise from less than $1,000 to over $20,000, which sent the entire crypto market into the troughs in a bear phase.
For months, price action was against the same support but at decreasingly lower levels. This is a sign of a downtrend. In November 2018, Bitcoin reached its bare bottom, forming a lower low.
The bullish narrative was triggered by news about a possible Facebook-led cryptocurrency and Bakkt's cryptocurrency exchange. Prices climbed to $14,000.
The rejection resulted in Bitcoin price action drifting sideways for several more months, forming yet another false bottom. A rally in early 2020 broke the downtrend but again, a false bottom was formed when all crypto crashed on Black Friday.
Bitcoin's price is at risk of another false bottom
Bitcoin is once more trading sideways and grinding against support that cannot be broken. After weeks of failed attempts, bears barely tasted below $30,000.
Bears are salivating for more and bulls must ensure that Bitcoin does not get there. The problem is that the Relative strength Index weekly has dropped to the level which in the past was the "false bottom". This fake bottom is held and bounces back, giving the rejection enough momentum to make it through the next attempt. This pattern is similar to an ABC correction where the C wave is always less than the initial corrections A wave. The B wave is in the opposite direction to the correction, and may or not have occurred yet.
Content is educational. It should not be considered as investment advice.