Is Bitcoin ready to skyrocket again?
The valuation of the entire crypto market fell by over $2 trillion in just one year. The current market cap for all cryptocurrencies is $867 billion, while Bitcoin alone has a market cap of $332 billion. The arrival of the new year starts debates about whether there will finally be a reversal. We will analyze Bitcoin over several time frames to determine the most likely outcomes.
Weekly time frame
The weekly time frame shows the important signals. As Bitcoin trades below $20,000, it is clear that Bitcoin has become heavily oversold. Only a few times in history has BTC fallen like it did last year, as shown in the tweet. As a result, many investors are now looking at crypto markets, but there is still danger ahead.
A bullish divergence predicted the last two and most important pullbacks on Bitcoin in the past 12 months. Now there is a third divergence which suggests that another upward movement may occur. Bitcoin is actually up 12% from the low formed in November.
So yes, the bottom may be in, but there are two things that could still send BTC lower. Unless the trend line is broken, there is no uptrend. Furthermore, there is a huge engulfment along with a gap caused a continuation of this downtrend. The cryptocurrency can tank at any time while filling the gap – the next few weeks will be crucial in determining the future trend.
Daily time frame
While the bullish divergence on a weekly time frame suggests that Bitcoin may move up soon, a bearish divergence on a daily time frame shows that it may still form a bottom leg at $14k-$15k. This is the ideal time for long-term investors to dollar-cost average their positions as the bottom approaches.
Bitcoin currently has a key resistance at $17,557 (June low), so it could still bounce lower to form a new low. Bitcoin has formed lower highs (LH) in recent months. There is a high probability that a new LH will be created, which will also result in a lower low (LL). Most important of all will be watching that trend line, because when Bitcoin gets above it, the uptrend is back in play. btc daily
Bitcoin stopped at moving average (EMA200) and resistance, indicating that it may be ready for the next move to the downside. However, traders should wait for the confirmation signal by watching the trend line on a 4-hour time frame.
If this trend line is broken, BTC could fall another 15% to 20%. It is important to point out the fact that this is one of the longest bear markets the crypto market has ever recorded, so there is a very high probability that a local bottom formation is close. So even Bitcoin drops another 15%, it won’t stay there for long like in 2018, 2015 and 2011.
If Bitcoin rises above $17,557, it could be on its way back to near $20,000, where there is a trend line. The probability of Bitcoin going down in the short term is high, but it is highly likely that it will bottom out at the end of the year or at the beginning of 2023.
