After this week’s flash crash in Bitcoin and Altcoins, the mood is bearish again. Bears are adopting the “I told you” tone on social media, referring to the “Dead Cat Bounce” in early 2018 as evidence of the bear market to come.
But according to a pitchfork channel tool dragged over key pivot points in Bitcoin price movement, this flash crash could have been the last slump ever before the last surge, the top is in and the real bear market is here.
The great Bitcoin bloodbath in El Salvador
The country of El Salvador introduced its law this week allowing Bitcoin as legal tender. Images of signs from big brands like Starbucks and McDonald’s adorned with Bitcoin logos have made the rounds on social media. The introduction of cryptocurrencies is happening like never before.
Related reading | Bitcoin Price Bloodbath: Is El Salvador a Sell the News Event?
On a day to celebrate the groundbreaking crypto asset that spawned an entire digital asset industry, it was instead a day of destruction.
Bitcoin price fell 20%, or up to $ 10,000 in a single day, from local highs of $ 52,000 on some platforms. The cryptocurrency has fallen sharply but is holding onto a key hub of a massive pitchfork channel.
Last bath ever? | Source: BTCUSD on TradingView.com
The pitchfork tool could locate the last break-in before Bull Peak
Pitchforks are usually associated with farming or angry mobs, but certain technical analysis tools also have the same name. Drawing the tool involves staking out the pitch at a specific point and stretching the pitch across the price movement to match specific trend pivots.
The tool is used subjectively, but if drawn correctly, it can provide the framework for predicting future price movements. The interesting thing about the Pitchfork channel is that every major line drawn is a Fibonacci level.
In the graph above, Bitcoin price is holding above the all-important 0.5 Fib – which happened to be the launch pad at the height of the last bull market. During this cycle, the top of this pitchfork channel was never touched, but the bottom was on Black Thursday.
Related reading | New to Bitcoin? Learn to Trade the NewsBTC Trading Course!
Another confirmation of the line the cryptocurrency is holding onto has also stopped the 2019 rally. He acted as a support in January and February 2021, then as a resistance in May and June.
The loss of the line in 2018 resulted in the bear market crashing to the bottom, and before that was the most recent surge during the last bull run. With bitcoin price holding the key center again, the next direction should be a hint from the top of the channel.
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