Bitcoin price It is still well below its previous record, but the top cryptocurrency by market cap at the time of writing is making another attempt to regain lost support near the all-time highs set earlier in the year.
The “Try again“So far it remains above a key level, and compared to past peaks in the crypto market, this time it almost certainly appears to be different. Whether the repeating pattern yields different results remains to be seen, but this time a single result would suggest a rally to new highs.
The four most expensive words: “This time is different”
According to Sir John Templeton, the most dangerous mentality when investing is to assume that “this time is different”. Markets are cyclical and price action often exhibits fractal patterns. Even Bitcoin itself appears to repeat itself in cycles every four years based on the built-in issuance mechanism called halving.
Related reading | What bear market? Bulls now “have control” over each Bitcoin time period
Despite this predictability, the way the cycle unfolds can present itself in unique ways. For example, the 2014-2015 bear market was a deep, rounded structure, leading to a dramatic rise and high in 2017. A failed retest led to lower highs and a descending triangle pattern which finally broke.
A retest of former support turned resistance is thus far holding | Source: BTCUSD on TradingView.com
In 2019, Bitcoin rallied from the most recent bear market bottom, kicking off a new cycle in cryptocurrencies. After breaking the asset’s all-time high in the same year, the remaining resistance above led to another failed test and a sustained bearish phase.
Bitcoin has outperformed once again, but this time the new posttest seems to hold, which could lead to new highs in the future.
Lack of Resistance Could Lead Bitcoin Back to Price Discovery
Lack of resistance during this phase of the cycle could result in a different result than the last two highs, despite Sir Templeton’s advice. The new tests also failed below the midline in the Bollinger Bands, which is a 20-week simple moving average on the weekly chart below.
BTC makes it above the middle-BB on this retest, not on others | Source: BTCUSD on TradingView.com
The current retest has placed it above the middle Bollinger band, which itself can be effectively used as a signal to buy or go long.
Keep in mind that during the last bull market, once the price of Bitcoin was able to stay above the simple moving average (SMA), the uptrend rarely stopped thereafter. It’s also when the leading cryptocurrency by market cap took off into the final stages of the latest bull market.
So is this time really different? With no resistance above, regaining this level with a successful retest could not be more optimistic for Bitcoin.
After failing to move higher, markets often retest a range. If successful, prices could go through the previous range. If unsuccessful, the price seeks a lower range. With less resistance than the previous highs, the most recent #Bitcoin retesting might be optimistic. But BTC must hold out. pic.twitter.com/0uznyPk5kC
– Tony “El Toro” Spilotro (@tonyspilotroBTC) August 19, 2021
Featured image from iStockPhoto, Charts from TradingView.com