) has been consolidating in the $18,000 to $20,000 price range since mid-June, stopping a strong bear market that began after the price peaked at $69,000 in November 2021.
Many analysts view bitcoin’s sideways trend as a sign of a potential market bottom, drawing comparisons to past cryptocurrency bear markets that show similar price action before sharp bullish reversals.
Here are three strikingly similar trends that have preceded previous market lows.
BTC price sideways in 2018
The Bitcoin bear market in 2018 serves as an important indicator of a potential market bottom in 2022 when looking at its eerily similar price trends and indicators.
One of the key indicators is Bitcoin’s 200-week exponential moving average (200-week EMA; blue wave in the chart below). In 2018 and 2022, Bitcoin entered an extended period of sideways consolidation after closing below the 200-week EMA.
Weekly BTC/USD price chart with 2018 bear market fractal. Source: Trading View
With the exception of 2018, Bitcoin’s sideways trend lasted nineteen days, with the price retracing its 200-week EMA as support, followed by a move to around $14,000 in June 2019. In 2022, the sideways trend entered its 19th day on October 28, but expect a clear break above the 200-week EMA around $26,000.
In addition, the weekly Bitcoin Relative Strength Index (RSI) is hinting at a potential bottom formation. In 2018, the fall of the RSI into oversold territory (below 30) was followed by a sideways trend in the price of BTC and, finally, a full-fledged bullish reversal.
This is half in line with Bitcoin’s RSI trend in 2022, given that it dropped below 30 in June and followed Bitcoin’s sideways price action between the $18,000 and $20,000 levels. It could be followed by a bullish reversal phase if the 2018 fractal repeats itself.
2013-15 subsidy for catching bulls
The 2022 Bitcoin bear market also bears similarities to the price trends seen in 2013-2015 which include downward trend line resistance, weak bull trap support trend line and horizontal support level.
Weekly BTC/USD price chart with 2014-2015 bear market fractal. Source: Trading View
The price of BTC has dropped 82% from its December 2013 peak of around $1,200.
At the same time, Bitcoin tried three times to close above the resistance level of the downtrend line (denoted by the letters A, B and C in the chart above). At the same time, the price received limited support from another downtrend line, resulting in a bull trap rally.
Bitcoin finally bottomed the horizontal trendline support near $200 followed by a strong break above the downtrendline resistance to hit the 0.236 Fibonacci line at $429. By December 2017, the price had reached nearly $20,000.
Bitcoin bear market 2013-15 on the weekly chart (enlarged version). Source: Trading View
By 2022, the price of Bitcoin meets all the requirements associated with reflecting the bear market of 2013-2015, with the exception of a breakout of the resistance of the downtrend line.
Bitcoin bear market 2022 on the weekly chart (larger version). Source: Trading View
Thus, at the beginning of 2023, if there is a breakout, the BTC/USD rate could rise to $30,000, the 0.236 Fibonacci line.
Bitcoin MVRV-Z Valuation
In terms of network analysis, Bitcoin’s 2022 downtrend has made it as undervalued as it was at the end of previous bear markets.
For example, Bitcoin’s Market Value to Realized Value (MVRV) z-score, which measures a coin’s overvaluation relative to its “real value,” hit an area coinciding with the previous bear market bottom, as shown below. .