Analysis: Bitcoin Holding Firm For 5 Weeks. Is A Bull Reversal On The Horizon?

Zinger Key Points
  • "The longer the consolidation, the bigger the breakout." In time, this logic is likely to apply to Bitcoin.
  • We need to see the $30,000 level hold firm.

My last post about Bitcoin, on May 11, highlighted a support level that could potentially halt the price's decline. 

The orange shaded area in the image below is the consolidation area, or sideways market. The June 2021 low forms the base/support, or the bottom of this consolidation. The April 2021 high is the first ceiling of the consolidation.

The price attempted to break through this level through the latter half of May but closed above it by the end of the month. It has remained above this level since. 

Bitcoin is now into its fifth week of holding at this level. Note how this level is a round number, $30,000, showing the significance of round numbers. 

Round numbers are levels that the price:

  • Moves towards when in a trend. As the price is currently in a downtrend since the high of November 2021, the next round number will be $20,000 if we see further weakness.
  • May reverse and cause the end of a trend meaning the price could push towards $40,000 if the bulls finally come in strong. 

This logic to round numbers can be applied across the board with stocks, commodities and currencies.

Below is the monthly timeframe for Bitcoin.

 

 

What next for Bitcoin?

At this stage, it is tough to tell. Price is not giving much away. 

  • The pessimist will shout for further weakness. 
  • The optimist will be hoping for a reversal to the upside. 
  • The neutral investor will stand aside and let the price dictate. 

My stance is to stand aside and let price dictate a clear trend direction. In the meantime, I will continue to focus on the stocks outperforming the market, as highlighted in my previous article

Stocks always form the foundation of my portfolio, given how consistently well they perform and the sheer number of opportunities the stock market offers. It is a missed opportunity for easy growth on your hard-earned money to ignore stocks and be overly obsessed with the crypto market, which is commonplace in today's online world. 

I am a firm believer in the saying: "The longer the consolidation, the bigger the breakout." This approach has proven to be very fruitful across all asset classes, and in time, this logic is likely to apply to Bitcoin. 

Once the price breaks out to the upside, we will likely see Bitcoin target $100,000 and beyond. 

First, we need to see the $30,000 level hold firm, and we can then assess from there. 

Patience, a much-underappreciated investor skill, is the best approach for now. 

Posted In: BitcoinCryptocurrencyLong IdeasEducationShort IdeasFuturesTechnicalsOpinionMarketsTrading IdeasGeneral

Visit Benzinga's Crypto Homepage - 1,000,000+ depend on Benzinga Crypto every month