History doesn’t repeat itself but it sure does rhyme. It is safe to say that BTC traders who have been following patterns from the fractal of the 2014-2015 bitcoin bear market have been right on current price more than they have been wrong.
The previous bear market fractal has been playing out with eery precision and as it continues to do so a $2000 BTC/USD price bottom might be the final resolution value investors (and bitcoin short sellers) have been waiting for. With the recently failed Inverted Head and Shoulders pattern the bears are back in charge. Let’s take a look at a possible roadmap for BTC price moving forward.
Bitcoin Price Fractal Analysis
The two bear markets started of rather similarly. A 70% price drop from their highs to $350 and $6000 respectively. This was followed by a prolonged sideways movement of $350-$650 and $5800 to $11,000. The 2014-2015 bitcoin bear market was finally concluded with a massive capitulation candle that saw prices crash an additional 53% to a new low of $176. After that, we witnessed an insurgency of new buying volume that lifted the price +37% capping the monthly close to $216.
A similar scenario playing out today would take bitcoin down to test the support are at $2000 (-51,92% from the monthly candle open) before bouncing back to ~$3000. At press time, bitcoin is trading at $3402 which means it would take an additional price decrease 38% to reach the proposed bottom. This would need to happen within the month of December.
BTC Volume and Short Interest
There are several key indicators that support this idea. The monthly RSI is down to record all-time lows at 43,84 similarly to the bear market of 2015. A lot of traders are split whether we have seen “real” capitulation or not. If we compare the monthly volume bars we can see that the 2015 capitulation candle has failed to reach ATH volume by -54.62% made at the peak of the bull market. Relatively speaking, bitcoin would need to reach a similar “volume spike” in order for it to be considered true capitulation.
The BTCUSDSHORTS positions remain at all-time highs with many traders waiting on $3200-3000 price targets. With increased short interest a “short squeeze” is becoming an inevitability. It is expected that a bitcoin price relief rally is likely to test the $3700-$3800 area before making its next move.