Bitcoin price is still well below its previous record, but the leading cryptocurrency by market cap at the time of this writing is making another attempt to regain lost support near all-time highs from earlier this year.
The “retest” has been holding above an important level so far, and compared to previous highs in the crypto market this time it almost certainly seems different. Whether the repeating pattern produces different results remains to be seen, but a unique result this time around would suggest a rally to new highs.
The four most expensive words: “This time it’s different”
According to Sir John Templeton, the most dangerous mindset in investing is assuming that “this time it will be different”. Markets are cyclical and price movements often exhibit fractal patterns. Even Bitcoin itself seems to repeat itself in cycles every four years based on the built-in issuing mechanism known as halving.
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Despite this predictability, the evolution of the cycle can present itself in a unique way. For example, the 2014-2015 bear market was a deep, rounded structure that resulted in a dramatic spike and peak in 2017. A failed retest resulted in further lower highs and a descending triangle pattern that eventually collapsed.
A re-test of the former support, which has become a resistance, holds so far | Source: BTCUSD on TradingView.com
In 2019, Bitcoin bounced back from the recent bear market low and started a new cycle in cryptocurrencies. After the top fell below the asset’s former all-time high that same year, remaining resistance above it resulted in yet another failed retest and prolonged bearish spell.
Bitcoin has hit a high again, but this time the subsequent retest seems to hold up, which could lead to new highs.
A lack of resistance could lead Bitcoin back to pricing
The lack of resistance during this phase of the cycle could lead to an outcome different from the previous two highs, despite Sir Templeton’s advice. Past retests have also failed below the center line of the Bollinger Bands, which is a simple 20-week moving average on the lower weekly chart.
BTC makes it over the middle BB on this retest, not on other | Source: BTCUSD on TradingView.com
The current retest made it through the middle Bollinger Band, which in itself can be used effectively as a buy or long signal.
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Note that the uptrend during the last bull market, once the Bitcoin price was able to hold and stay above the median SMA, barely paused from that point on. It is also when the leading cryptocurrency by market cap entered the final stages of the final bull market.
Is this time really different? With no resistance above, it couldn’t be more optimistic for Bitcoin to regain that level with a successful retest.
Often times, after failing to move up, the markets retest a range. If successful, prices can break through the previous range. If this is unsuccessful, the price will find a range below instead. With less resistance than past highs, the recent #bitcoin retest could be bullish. But BTC has to hold. pic.twitter.com/0uznyPk5kC
– Tony “The Bull” Spilotro (@tonyspilotroBTC) August 19, 2021
Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. The content is educational and should not be viewed as investment advice.
Featured image from iStockPhoto, charts from TradingView.com