Bitcoin: Why investors can consider revisiting BTC’s July and October behavior
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- BTC’s market structure on the whole looked quite bearish
- A fake breakout to the upside could be followed by a deep plunge toward $14K
In anticipation of the release of the FOMC minutes on 23 November, BTC regained the $16K level and was up by 5%. It was trading at $16.5K at press time, boosting the rest of the altcoin market.
A similar price rally was seen before the FOMC meeting and subsequent 75-point rate hike between 2 and 3 November. But BTC declined afterward, coinciding with the FTX implosion.
Read Bitcoin’s [BTC] price prediction 2023-2024
If history repeats itself, the current price rally could be nipped in the bud by the ongoing FUD surrounding Genesis’ bankruptcy. That would send BTC plummeting toward the $14,000 mark in the long run.
Breakout from a descending triangle: Will the bears gain the upper hand?
BTC traded between $18.5K and $24K during mid-July and mid-November. The midpoint of this range was $21.5K. However, since mid-September, BTC has been trading on the lower side of the range and finally broke through the support of the range on 9 November.
BTC found new support at the 0% Fib level at $15.5K and tested it thrice. The more times support or resistance is tested, the more likely it is to be broken. At the time of writing, BTC was in the state of a price recovery.
BTC’s price action over the past two weeks formed a descending triangle (white lines) that was part of a larger bearish pennant with a flagpole (blue line).
The current bearish triangle was also similar to two previous triangle chart patterns in July and October. In both cases, a false breakout to the upside was followed by a price drop. If history repeats itself, BTC could head lower after breaking through the current $15.5K support with $14K as possible new support.
The bearish bias was also supported by the Relative Strength Index (RSI), which stood at 39. This showed that the bears still had leverage at press time. The On-balance Volume (OBV) was also on a decline since September. This showed that the market structure on the daily chart still favored the sellers.
However, a candlestick close on the daily chart above the 23.6% Fib level ($16.9K) would invalidate the bearish bias. Thus, confirmation of the breakout to the upside could coincide with a possible Moving Average Convergence Divergence (MACD) crossing. This could be a buy signal for investors.
Negative sentiment in BTC and price/volume divergence: Imminent price reversal?
Some on-chain metrics pointed towards a bearish structure of BTC. According to Santiment, BTC’s overall weighted sentiment further fell into negative territory, indicating a bearish outlook.
In addition, the recent price rally has been accompanied by a decline in trading volume. This represented a price-volume divergence. Furthermore, this also indicated a weakening buying pressure, which could undermine a notable rally. Therefore, the bulls could be overwhelmed, and BTC could see a deeper plunge in the coming days or weeks.
BTC investors should follow the FOMC minutes and the impact of Genesis’ alleged bankruptcy on the market to gauge sentiment and get a better perspective on the potential price direction.