Despite the bearish macroeconomic view, Bitcoin has performed extremely well over the past few weeks, rallying from the $3,700 lows to a high of $7,500 just last week. Even after a slight correction, the cryptocurrency remains around 90% higher than it did during the “Black Thursday” crash.
But, some analysts are starting to worry that with the rallying pausing, there’s potential for bulls to reverse the trend.
Bitcoin Looks Almost Exactly as it Did When It Topped at $10,500
Cryptocurrency trader DonAlt recently shared the below chart, showing that while the recent daily candles have not been “super bearish,” it is “awfully close to how the $10,000 top played out” pointing to structural similarities between that time frame and now.
The asset following the playbook it made last time it saw such similar price action will see it tumble off a cliff in the coming weeks, likely to retest the lows.
The similarities between the two time periods don’t stop there.
Cryptocurrency analyst Mayne indicated that Bitcoin is currently in the midst of printing out a rising wedge pattern, which is what marked the $10,500 top as well. Rising wedges are textbook bearish, meaning BTC could fall from here.
Related Reading: Analyst: This Textbook Bottom Could Send XRP Price 100% Higher
It This Time Different?
Considering the charts shared by DonAlt and Mayne, there is no denying the ongoing price action is similar to that seen when Bitcoin topped in February. But, can it be said that “this time is different?” Can it be said that BTC will shun off these bearish technical factors?
Yes, for there is now a confluence of decisively positive technical, on-chain, and fundamental factors that weren’t present back when BTC topped out earlier this year. The factors that could be listed are many, but here are a few of many:
There’s been a strong increase in the number for “daily new entities on the Bitcoin network.” The metric’s seven-day moving average, which calculates the number of new users entering the BTC network, has risen from the 6,000 lows in mid-March to 17,000 just recently, an increase of nearly 200% in just a few weeks’ time. This is interesting as the metric hasn’t been this high since around April 2019, as the rally from the $3,000s and $4,000s bottom to the $14,000 peak by late-June was starting.
According to data from Skew.com, after yet another series of prints, the value of all circulating USDT supply has risen to $6.7 billion, $2.2 billion higher (or 42% higher) than the approximately $4.5 billion market cap seen at the start of March.
Over the past few weeks, we’ve seen governments and central banks mobilize more than they ever before to stop the coronavirus outbreak and the economic effects related to this. Many say this will be positive for Bitcoin as the cryptocurrency is scarce.
Related Reading: Ethereum Firm Launches Controversial Product, and the Crypto Community Isn’t Pleased
Photo by Marc-Olivier Jodoin on Unsplash