Is Bitcoin Set for a Comeback? (Free content)
Analyzing Key Scenarios
Bitcoin is now at a critical phase of the correction. There has been significant selling in the last 30 days, resetting sentiment considerably. We saw a high volume of selling, unmatched since March. But has it been enough? I'm watching 58.5k as a crucial level for BTC to close above to confirm a trend resumption. As of now, BTC has rejected that level today and might continue the correction.
Looking at the weekly chart, we see a clear change in trend with lower highs and lower lows. Therefore, I don't expect Bitcoin to make new highs soon. The trend is broken, and it will take time to shift back to an uptrend. Fortunately, there is enough time in this 4-year cycle to rebuild a base and move up again.
On the monthly chart, this 27% drawdown seems minor, not more than a typical test of the 10SMA (blue). However, fear is widespread, and sentiment has reset significantly. Discussions of double tops, Wyckoff distribution patterns, and breakdowns are increasing on my feed. Just know panick it the highest at the end of the correction.
As a crypto investor, I prepare for various potential outcomes. So here are three scenarios I'm currently considering:
Scenario 1: Most bullish
Bitcoin trades higher from here, returns to the 60k-70k range, has a typical September correction along with stocks, and then rallies into the end of the year.
Scenario 2: Still bullish
Bitcoin resumes the bull trend but needs more time. A 9-month consolidation from the all-time high in March until the end of the year. After this sideways movement, the bull market continues into 2025.
Scenario 3: Bitcoin has topped
This scenario, feared by many, suggests a left-translated cycle top. Bitcoin made a new high early in this cycle, so we can't ignore it. Although this seems less likely, it's important to have a plan:
- Option 1: Sell your Bitcoin if it trades back to the upper range near 70k. You can then buy again after confirming a breakout into new highs.
- Option 2: Sell only if it breaks below the last (once confirmed) weekly low at 53.5k. This would be disappointing, but since we entered Bitcoin below 20k, it's still more than a 150% gain.
These are the scenarios I'm preparing for. Of course, things can change quickly, so make sure to follow me for regular updates.
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Written by Timothy Assi, a popular investor on eToro. Follow & copy my portfolio:
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