This Bitcoin Downtrend Won't Hand Out an Easy Bottom
The tape is bearish, sentiment is rotten and the burden of proof is on the bulls.
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Sometimes a bearish chart is just that: bearish. And all the arm-waving and table pounding in the world won’t change that. Only time can.
In late January, I pointed to the $85,000 to $95,000 price channel on Bitcoin and suggested traders treat it as a trading range within a bearish trend. When price broke beneath $85,000, I expected a defense around $73,000. Wrong!
The selling was nonstop until $60,000.
For traders, BTC’s superpower is liquidity plus volatility. The trap is falling in love with a narrative, or worse, a personality. The near-daily calls for $250,000 in “weeks” were entertaining in October and November. By mid-December is was tiresome. Today, with BTC in a clean downtrend, it’s just silly.
You don’t have to use charts. But if you choose to use them, don’t pretend they stop existing when they offend your thesis
On a daily chart, price is a bit stretched, but the structure is unchanged. Lower highs, lower lows, and failed attempts to reclaim key moving averages.
Now check out a weekly chart:
Last week's decline pushed BTC back into the prior congestion zone from late February to early November 2024. Call it roughly $53,000 to $72,000. If you’re looking for a reason to be bullish, you’ve got the 200-week SMA sitting around $58,500. But aside from oversold conditions and sentiment about as rotten as I’ve seen it in a while, this chart has a lot of work to do to look like anything more than a quick scalp.
Here’s my take:
If you’re an investor who wants to own BTC for the long run and you’ve got a dollar-cost-average strategy in place, stick with it and stop worrying about daily price gyrations. Just don’t let delusional Twitter victory laps and CNBC theatrics suck you into overconfidence at the wrong time.
If you’re a trader who wants more than quick volatility scalps, be patient. At a minimum, wait for price to reclaim the eight-day and 21-day exponential moving averages and start building an actual base. Right now, we have a strong bear trend, and strong bear trends don’t hand out easy bottoms.
At the time of publication, Byrne was long IBIT in long-term accounts.
