Bitcoin Has Only Had One Other Rounded Top, And a Major Correction Followed

If the current price action is a top formation, then it doesn’t match the sharp spikes Bitcoin and blow-off tops the cryptocurrency is known for. Only one other time has a comparable rounded top formation appeared on BTCUSD price charts over the last ten years. And when it happened, a major correction followed.

Should the first-ever cryptocurrency fail to pump soon and prove this trading range isn’t a top, then another collapse could be next.

When Will The Confusing, Sideways Trading Range End and Crypto Break Out?

The current Bitcoin price action has the crypto market and its participants confused. The indecision is reflected in both the sideways price action and the doji on the June monthly close.

Volatility in the normally notoriously explosive asset class has reached record lows. The cryptocurrency rarely stays in this tight of a trading range for very long. When it does eventually break out, a powerful, over 20% move follows, according to data.

Crypto analysts review past price action in Bitcoin seeking clues to how current and future price movements may play out.

Related Reading | Bitcoin Monthly Shows Indecision, Data Reveals The Shocking Aftermath of Past Doji

Fundamentally, Bitcoin has never been healthier. The cryptocurrency’s halving just passed, and records are being set for the fewest BTC moved in years. A number of key indicators are “screaming buy.”

Technically speaking, the cryptocurrency could be on the verge of its next long-term uptrend. Or, another crash could be on the way before that happens.

And if the current price action is a slowly rounding top, it marks only the second structure of this kind in the asset’s history. Only one other time did Bitcoin trade within a similar range and timeframe, and a massive correction followed.

Bitcoin Ditches Sharp, Blow-Off Tops For Rounded Formation, Last Time a Dangerous Drop Followed

The leading cryptocurrency by market cap is at an impasse. A new tool indicated that Bitcoin’s next bull run was here, but the pandemic had other plans. Now, cases of the outbreak are skyrocketing across the globe, putting the crypto market at risk of another steep selloff.

The last panic-driven selloff on Black Thursday cut Bitcoin price in half within 48 hours. The move shocked the investment world as record losses were around every turn.

While the asset has since recovered alongside the stock market, as cases spike again, there’s more danger and risk ahead.

Coinciding with this concerning increase in cases and a return of fear, Bitcoin is ready for a decision to be made.

The asset has been trading sideways for a total of 63 days within a 20% range. The only other instance of a rounded top in Bitcoin’s history that traded within a similar range and timeframe, resulted in a shocking drop.

bitcoin btcusd rounded top

The drop resulted in yet another lower low in Bitcoin and a deeper dive into an extended bear market.

Such a scenario, given Bitcoin’s fundamental health and the hyperinflation that is coming, is unlikely. However, Bitcoin must prove that this isn’t a long, drawn-out rounded top.

This type of rounding top formation exhausts buyers at high levels, causing the drop to be that much more significant. Fewer buyers are willing to step in on the way down after buying at a loss above.

Related Reading | Fund Manager: If Black Thursday Didn’t Shake Out BTC Holders, Nothing Will

It could be the catalyst necessary for a larger, more effective shakeout of the strongest holders.

A rounded top here at current prices would result in a lower high. The Black Thursday drop following the fall to $6K in December 2019, acted as a lower low.

A lower high and a lower low is the definition of a downtrend forming. If Bitcoin cannot set a new high, a lower low may be coming, and this rounded top could be the reason.

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Source: Newsbtc

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