Bitcoins
As Bitcoin (BTC) attempts to hold the $74,000-$75,000 area, an analyst suggested that the flagship crypto could see another 10% rally toward a key area, but warned that this level could be the ceiling.
Bitcoin Double Bottom Breakout Targets Key Level
In a Wednesday analysis, crypto analyst Rekt Capital shared an outlook for Bitcoin’s potential rally, as it holds the $73,000-$74,000 area as support for the first time in a month.
The analyst highlighted that BTC’s price continues to move between its 2021 and 2024 all-time highs (ATHs), which have been a major resistance area since the early February correction.
After the recent market rally, the flagship crypto retested the 2021 ATH as a new support level on the weekly timeframe, but ultimately rejected from the 2024 ATH during last week’s close.
According to the analyst, if Bitcoin can weekly close above the 2024 ATH, located around $74,000, then the price could move into the high $70,000. “Until that confirmation, however, price will continue to be sandwiched between 2021 and 2024 old All Time Highs,” he added.
Rekt Capital also noted that BTC has formed a double bottom pattern in the weekly timeframe, and is “now pressing beyond the resistance” of the formation. As he explained, the cryptocurrency would need a weekly close and a post-breakout retest of the top of the double bottom, around $72,810, to confirm a breakout.
If it confirms a breakout from this formation, the price could rally toward the $81,000-$82,500 area in a Measured Move. Nonetheless, the analyst warned that, given the phase of the market cycle we are currently in, the price will likely develop a macro market structure that “will appear sufficiently bullish only to ultimately fail over time.”
“The failure could occur by virtue of rejecting from the Double Bottom resistance, by failed post-breakout retest to register a fake-breakout, or by falling short of a Measured Move once the breakout is confirmed.”
BTC Resembles 2014 Breakdown
Rekt Capital also analyzed BTC’s historical behavior to assess the ongoing rally’s potential failure. The analyst noted that whenever Bitcoin has broken down from its macro triangle formation, the price usually retraces until it forms a bear market bottom. However, the way the cryptocurrency does that has differed from cycle to cycle, he detailed.
In 2018 and 2022, the breakdown led to a very quick bearish acceleration toward the bear market bottom accumulation period. On the contrary, Bitcoin consolidated below the triangle base in 2014, retested it, and saw another leg down.
This time, BTC’s performance resembles its 2014 breakdown, as it has been consolidating behind the triangle base after losing it in January. To the analyst, if the cryptocurrency continues to mirror its 2014 performance, the price could consolidate a bit longer, potentially rally to the base at $82,500, before rejecting.
“Furthermore, Bitcoin tends to build major consolidation periods on breakdowns from Macro Triangles. In 2018 and 2022, these major consolidation periods developed at Bear Market bottoms,” Rekt Capital explained.
“Whereas in 2014, Bitcoin built two such periods: just beneath the Macro Triangle it broke down from, and then later at its respective Bear Market Bottom,” he continued.
The analyst concluded that if history repeats, BTC’s current consolidation could precede additional downside, and another major consolidation period could develop during the bear market bottom.
Featured Image from Unsplash.com, Chart from TradingView.com
Rubmar Garcia Read More