Bitcoin: Why investors can consider revisiting BTC’s July and October behavior

Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.

  • The structure of the BTC market in general seemed quite bearish
  • A false breakout to the upside could be followed by a deep drop towards $14K

In anticipation of the release of the FOMC minutes on November 23, BTC reclaimed the $16K level and is up 5%. It was trading at $16.5K at press time, driving the rest of the altcoin market.

A similar price rally was seen before the FOMC meeting and the subsequent 75 point rate hike on November 2-3. But BTC declined afterwards, coinciding with the FTX implosion.

Read Bitcoin [BTC] price prediction 2023-2024

If history repeats itself, the current price rally could be nipped in the bud by the ongoing FUD surrounding the Genesis bankruptcy. That would send BTC plummeting towards the $14,000 mark in the long term.

Breakout of a Descending Triangle: Will the Bears Gain the Advantage?

Source: TradingView

BTC traded between $18.5K and $24K in mid-July to mid-November. The midpoint of this range was $21.5K. However, since mid-September, BTC has been trading on the lower side of the range and finally broke out of the range support on Nov. 9.

BTC found new support at the 0% Fibonacci level at $15.5K and tested it three times. The more times support or resistance is tested, the more likely it is to be broken. At the time of writing this article, BTC was in a state of price recovery.

BTC price action over the past two weeks formed a descending triangle (white lines) that was part of a larger bearish pennant with a flagpole (blue line).

The current bearish triangle was also similar to two previous triangle chart patterns in July and October. In both cases, a false breakout to the upside was followed by a fall in price. If history repeats itself, BTC could turn lower after breaking the current support of $15.5K with $14K as a possible new support.

The bearish bias was also supported by the Relative Strength Index (RSI), which stood at 39. This showed that the bears still had leverage at press time. On-balance sheet volume (OBV) also declined from September. This showed that the market structure on the daily chart still favored sellers.

However, a candle close on the daily chart above the 23.6% Fibonacci level ($16.9K) would invalidate the bearish bias. Therefore, the confirmation of the breakout to the upside could coincide with a possible moving average convergence/divergence (MACD) crossover. This could be a buy signal for investors.

Negative BTC sentiment and price/volume divergence: price reversal imminent?

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Source: Feeling

Some on-chain metrics were pointing towards a bearish BTC structure. According to holydayBTC’s overall weighted sentiment fell further into negative territory, indicating a bearish outlook.

In addition, the recent rise in prices has been accompanied by a decrease in trading volume. This represented a price-volume divergence. Furthermore, this also indicated weakening buying pressure, which could undermine a notable rally. Therefore, the bulls could be overwhelmed and BTC could see a deeper drop in the coming days or weeks.

BTC investors should follow the FOMC minutes and the impact of the alleged Genesis bankruptcy on the market to gauge sentiment and gain a better perspective on possible price direction.