Bitcoin’s (BTC) massive break down from a months-long consolidation marked a return to volatility for the leading crypto, as it now endeavors to carve out a new market structure. A symmetrical triangle pattern has formed and should break soon, mirroring in the extreme minor the same sort of drama from two days ago: which way will it break?
Looking in tight at the 1-hour chart, Bitcoin looks ready to put in the second portion of its move after completing a small consolidation after the first dump. There are two things that suggest that the coming move will be down.
First is that, the RSI trend has been broken after putting in a series of bullish divergences — which didn’t result in a break up. The second is that, the formation clearly and simply looks like a bear flag at the end of a massive drop, anticipating a further drop.
What happens here is pretty important: as we recently discussed here, the long term uptrend is in the midst of being challenged by this breakdown. Although price could push a little lower and still recover, while still remaining within historical limits of a Bitcoin long uptrend, the situation is pretty precarious.
If we look at the daily, we see that Bitcoin is perfectly riding the 200 simple moving average (SMA), and is in the middle of a very thick knot of support. BTC spent a month churning through this support zone on the way to $14,000, and thus it is pretty likely that the leading crypto will hold somewhere here. The bottom side of this zone is about $7,600.
One interesting development is the Bitcoin dominance chart. Bitcoin dominance seemed to start retreating from exceptionally high levels (exceptional for the post-2017 crypto ecosystem, that is) on September 13. Now, it seems to have resumed this fall in dominance, even after continuing to rise during the Bitcoin collapse.
Indeed, the altcoin market was generally trashed during the Bitcoin collapse, losing double — both against Bitcoin and against fiat (with at least one shining exception).
The situation is still very fresh and nothing is really clear. A local market structure has yet to form, and until then we are all along for the ride — all hail volatility.
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