Bitcoin looks bullish on its daily time frame for the first time since 2017. After A 5-month long base of consolidating between the $3200’s and the $4300 level, we finally had a break to the upside. We haven’t seen a Bitcoin breakout with this kind of follow through this since August 2017 during the last bull run. So what does this mean for the price of Bitcoin this year and in the future?
We’re Not Going Straight Up
Yes, we broke a significant resistance level in the low $4000’s. This does not mean we’re going straight back to $20,000. If a bull market is returning, it will not be like the one in 2017. You can see on its daily chart from the last 18 months how much supply it has to get through before it gets back to all-time highs:
There will still be a ton of range and volatility to play off of in the upcoming months. A lot of day trading and swing trading opportunities to come. $6000 will be a major resistance level to get through, in addition to the $10,000 and $12,000 levels. It will likely need to test these levels a few times and consolidate before breaking over these. Do not expect to see $20,000 and ATHs overnight.
Why Is This Time Different From 2018
We had numerous 10-20% rallies in 2018. So why is this one different? The answer is the basing period that proceded a huge move down. We had a 4 and ½ month basing period after an eighty-something percent retracement off of the ATHs in late 2017.
We have talked in the past articles about Bitcoin bear markets, and how long they typically will last for. In that article, we discussed how the other 4 major Bitcoin retracements since its founding have retraced 80%-90% from its all-time highs before bottoming and breaking the former high. Bitcoin trading in the $3000’s the last few months was about 80%-85% off its all-time highs.
Based off this plus the bullish price action the past few months, it seemed like a decent chance that the low $3200’s could be the bottom of the bear market. The current price action is much different from the dead cat bounces we saw last year.
Capitalizing On The Bitcoin Breakout
This was a tough move to capitalize on, as it broke out over the $4300 level at 12:30 AM EST last night. We had people in our 24/7 Cryptostreet chatroom capitalize on it. When trading a 24/7 market like with cryptos, it helps a ton to have a community with 100’s of other eyes on the market to alert you to a big move like this one early on.
It will be interesting to see how Bitcoin behaves in the upcoming days. Right now, we are in a buy BTC on dips phase. So far, we have held up over the breakout level, and are flagging in the $4700’s. We may need to retest the $4300 level again before heading higher (very common in cryptos). Keep BTC and other major altcoins like Litecoin, Ethereum, ect. on the top of your trading watch list.