The Last Time Bitcoin Formed These 3 Patterns, It Dropped 60% in a Week

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Bitcoin has finally started to move higher after flatlining around $9,000 for over 10 days. During Wednesday’s trading session, the leading cryptocurrency moved as high as $9,475 — the highest price in weeks. Analysts say, however, that this price action hides an eerie set of bearish technical occurrences. What’s interesting is out of these technical occurrences, there are some that were last seen when BTC topped at $10,500 in February. Bitcoin Forms Eerie Similarities to February’s Brutal $10,500 High A pseudonymous cryptocurrency trader says that Bitcoin’s recent price action is almost structurally identical to the $10,500 high seen in February. He shared the chart below on July 8th, showing that both periods have the exact same three trends: a semi-rounded top, a markdown after that top, then an ascending triangle that fails to trigger a bullish recovery. Worse yet, the on-balance volume indicator looks almost identical to how it looked near the $10,500 highs. Should Bitcoin follow the path it took last time this structure was in place, it will dive 60% in the next week. Bitcoin analysis (February vs. now) from crypto trader “Nebraskan Gooner” (@Nebraskan Gooner on Twitter). Chart from TradingView.com This formation is far from the only similarity that analysts have seen between Bitcoin’s 2020 year-to-date high and the recent price action. Per previous reports from Bitcoinist, an analyst shared the chart below last week. It shows that from the perspective of the Ichimoku Cloud, BTC is structurally almost identical to the February highs. Bitcoin chart from IchimokuScholar (@IchimokuScholar on Twitter). Chart from TradingView.com All Eyes on the S&P 500 Although the charts of Bitcoin then and BTC now may be eerily similar, the crypto market’s fate is somewhat dependent on the stock market. As a team of JP Morgan analysts observed in the middle of June in a report on the cryptocurrency market: “[Since June,] Cryptocurrencies have traded more like risky assets like equities—a significant change relative to the prior couple of years.” There are many, unfortunately for bulls, warning that the S&P 500 could soon be subject to a retracement. Assuming the correlation between these asset classes holds, that means Bitcoin could also drop. Prominent stock investor Jeremy Grantham spoke with CNBC in June on his outlook for the stock market. The long-time investor, who called the Dotcom Bubble and Great Recession, said that: “My confidence is rising quite rapidly that this is the fourth ‘Real McCoys’ bubble of my investment career… The great bubbles can go on for a long time and inflict a lot of pain. The previous three bubbles Grantham referred to were Japan in 1989, the tech bubble in 2000, and the housing crisis of 2008.” What could unexpectedly buoy the stock market, though, is a new stimulus bill by the U.S. government. Such a bill would likely put investable money into the hands of millions while reassuring investors that businesses will stay afloat. Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com The Last Time Bitcoin Formed These 3 Patterns, It Dropped 60% in a Week

OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow