Bitcoin Breaks 19-month Weekly Trendline

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  • Bitcoin has broken a 19-month weekly trendline
  • It is now closing in on a trendline dating back to November 2011
  • Breaking suh trendlines isn’t necessarily a bad thing

Bitcoin has invalidated a weekly trendline dating back to the start of the bull run in September 2020, suggesting that the market is still some way away from matching the performance of 2021. This weakness now means it is on the verge of testing a two-weekly trendline dating all the way back to 2011, which some may think spells the end of Bitcoin’s magic run when it more likely reflects a slowing down of its gains.

Bitcoin Finally Breaches Trendline

Bitcoin has been flirting with the weekly trendline since January, touching it but rebounding on two occasions. However, on both those occasions it has been unable to breach the key $48,000 level and has fallen back, this time finally breaching the trendline:

Bitcoin 1

The breaching of this support line, were it to close the week underneath it, would be confirmation that the 2020/21 bull run wave is officially over and a period of correction/accumulation is expected before a new uptrend can begin.

Intriguingly, it also brings up the prospect of Bitcoin testing a trendline dating all the way back to November 2011:

Bitcoin 2

Given that Bitcoin is currently plateauing there is every chance that this trendline will be breached too in the next two-week spell, given that it currently sits at $36,775. However, even if this happens all is not lost.

Bitcoin has followed four-year cycles based around its halvings since it was launched in 2009, but as assets grow in size it becomes harder to move the price – in 2011 it was a nippy young motorbike but in 2022 it is a juggernaut, bigger and less nimble, with its moves taking longer to complete.

Expanding Cycles Explain Trendline Loss

This rationale explains why the loss of a trendline, even a long term one, doesn’t signify the end of a market cycle. All it indicates is that Bitcoin is moving in expanding cycles in line with its extended market cap – don’t forget that it is still only 44% off its November 2021 high, something that is typical for a Bitcoin bull run.

The fact remains that support lines are more important for a growing asset like Bitcoin, with $30,000 being a much more important level than the weekly trendlines of months and years gone by:

Bitcoin 3

As long as Bitcoin remains above this level we an be confident that a new cycle is months rather than years away, but a weekly close under this level probably means a trip to goblin town until the 2024 halving.