Bitcoin Weekly: Bear Market Rally Continues

Bitcoin continues its bear market rally. Can it go higher? Possibly. Is the final bottom in? Probably not.

Back in early February, after the drop to 60k, I lined out three possible scenarios. The most likely of them being a bear market rally lasting a couple of months, followed by a new leg down to the final bottom some time later in the year.

This counter-trend rally scenario seems to be exactly what’s playing out. Although to be honest, it happened slower than I expected it to, and I started to doubt it would go much higher after stock markets broke down a couple of weeks ago. However, the stock market breakdown turned out to be false, and bitcoin found some tailwind from stocks moving to new all time highs.

Could it even be that bitcoin has bottomed out? Well, it’s certainly possible. But not likely. This looks like a textbook bull trap — a counter trend move to draw people back in, before turning around into a lower low sometime in the next few months.

Could this outlook change? Of course. But for me to turn bullish, bitcoin would have to clear the 40 week moving average, and form some kind of clear bottoming pattern. Until then, I remain bearish.

With a long-term trend following strategy like the one I’m using, you will never catch the bottom, and you will miss out on these kinds of bear market rallies. That’s just how it is.

Patience.