The recent rise in prices in the Bitcoin (BTC) market risks being erased by the strange fractal in 2018.
Similarities with the Bitcoin price cycle
The fractal was first discovered by CryptoBullet, an independent market analyst, and shows bitcoin following the inverted head and shoulders pattern (IH&S) that preceded the $ 3,100 price crash later in December 2018. similar fall in 2022.
This is mainly due to the strikingly similar price trends between the price decline in 2018 and 2021-2022. For example, Bitcoin reached two higher peaks in April and May 2018 of around $ 10,000 before falling below $ 6,000 in July, creating an IH&S pattern.
Daily BTC / USD price chart showing IH&S fractal for 2018. Source: Trade view
Interestingly, in October 2021-February 2022, Bitcoin followed a similar price path, forming two higher peaks around $ 65,000 in April and $ 69,000 in November. The price was then adjusted to below $ 33,000 in early February with a new IH&S pattern.
As IH&S forms a bullish reversal pattern, BTC is now waiting for an eruption of $ 50,000 or higher. A similar technical setup shared by market analyst Lark Davis shows Bitcoin over $ 60,000.
BTC price fractal in 2018 risks catching bulls
But an increase to $ 50,000 – or even $ 60,000 – cannot remove Bitcoin from its prevailing bearish bias. If the 2018 fractal repeats itself religiously in 2022, there is a greater chance that BTC will fall to $ 25,000, as shown in the chart below.
Weekly BTC / USD exchange rate chart. Source: Trading View
In particular, the price action in 2018 saw bitcoin skyrocket after the formation of IH&S, reaching almost $ 10,000.
That said, the BTC price briefly regained its 50-week exponential moving average (50-week EMA; red wave) in support, but later broke lower. As it happens, the price fell further towards the 200-week EMA (blue wave) around $ 3000, reaching its lowest level in December 2018.
By applying the same fractal to the current price action, Bitcoin can end up above the 50-week moving average, eventually hitting levels in the $ 50,000 to $ 60,000 range. By doing so, it will go back during the red wave, and continue the decline to the 200-week moving average, which is around $ 25,000.
The negative outlook is in line with what Ari Rudd, an independent market analyst, shared in a series of Twitter tweets on 14 February.
As reported by Cointelegraph, the chart shows a fractal logarithmic increase and a moving average pillar support, indicating that the price of BTC may fall to the $ 24,000- $ 27,000 range in the coming months.
Not a new 2018?
On the other hand, Bitcoin is moving towards more bullish fundamentals than in 2018. In particular, the price of BTC rose from less than $ 4,000 in March 2020 to $ 69,000 in November 2021, among wave-driven institutional and retail adoption. in retail and institutional adoption. Macroeconomic risks such as high inflation.
An editorial from November 2021 by Bloomberg Opinions’ John Other notes that headline inflation, the consumer price index (CPI), has risen by almost 28% in the last 10 years. But the ranking of the same metric in Bitcoin resulted in a 99.99% reduction. But the calculation came with a reservation.
“If you invested all your savings in bitcoin ten years ago, you did well. Should you do it now? Probably not,” others wrote, adding:
“Over the last 10 years, bitcoin has led to severe deflation, including 76% in the last 12 months alone, as well as two horrific events where annual inflation exceeded 200%.”
In particular, the “scary episodes” occurred during the negative episodes in 2015 and 2018.