In the recent occurrence of Bitcoin reaching a new high followed by a drop, a development took place. In this analysis, I am going to discuss the characteristics of trends, particularly about Bitcoin, and to examine a bear trend.
Bitcoin experienced a substantial drop, and unlike previous instances, there was no subsequent extension or continuation of the upward trend. This marks the first occurrence of such a phenomenon. Bitcoin bulls were previously confident in the possibility of reaching $100K due to the consistent pattern of extension legs following the breaking of previous highs.
Throughout 2022, we often heard the phrase “Bitcoin has never…” as various long-held beliefs about Bitcoin were challenged and proven wrong. This shows a significant shift in the landscape of Bitcoin. It’s uncertain whether this shift represents an important change in the trend, but if it does, we may currently be in the late stages of a bull trap. There’s a sense of returning to normalcy, with positive news driving sentiment and bears being squeezed out.
In a bull trend, these factors would be viewed as setting up for a breakout, but in a bear trend, they serve as warning signs of potential trouble. In the $55K – $60K price range, bulls should exercise caution. If a bullish breakout occurs, there may still be an opportunity for a long entry at a later time.
If the failure to extend in a new trend leg and the break of the previous low in 2022 signal a reversal of the macro Bitcoin uptrend, then we could be facing the setup for the most significant rug pull in Bitcoin’s history.
