- Bitcoin is flirting with a 10-year trendline that could suggest the bottom is in
- The trendline has acted as support and resistance at different points in this bull run
- What can we learn from such trendlines?
Bitcoin is yet again flirting with a 10-year trendline that it has acted as support and resistance at several points in the last 18 months and that may have signalled that the bottom is in for the current dip. Let’s look at the trendline and see what we can learn from it.
Bitcoin Trendline Has Been Busy Since 2019
The trendline in question began when Bitcoin bottomed out in 2012 and next came into play in late 2019, at the tail end of the bear market:
As we can see, since touching the trendline again back in December 2019, Bitcoin has by and large used it as a base for continued growth, with the only anomaly being the March 2020 crash. However, had this black swan event not taken place it’s more than likely that Bitcoin would have obeyed the trendline, although it’s interesting that once it did drop below it, the trendline acted as resistance from May to November of 2020 before finally breaking through in its race to all time highs.
What’s also interesting to note is that the 50% crash in May 2021 stopped exactly on this trendline, as has (so far) the bottom of the late 2021 crash.
Trendlines Can Inform Points of Reversal
So what can we learn from such trendlines? Of course, they don’t represent hard and fast rules, but something that has (black swans aside) been respected in such a manner for a decade could well be used as offering an idea of Bitcoin’s overall direction. We can also use them to suggest potential points of reversal.
The trendline will face a test during the next bear market however, given that Bitcoin is now hugging it closely, suggesting that unless it can deviate away from it in a final push over six figures, there’s a good chance it will be broken. However, if history repeats, then we may also be able to use another break above it as a sign that the bull market is back.
This Bitcoin trendline is merely an interesting observation that shouldn’t be used to guide your investment thesis, but it will be interesting to see how it plays out in 2022 and beyond.