Bitcoin Price Discovery Phases
Potent strategies for navigating the next few weeks
Welcome to the Rekt Capital Newsletter, a resource for investors who want to better navigate the crypto markets with the help of cutting-edge crypto research and unbiased market analysis.
Bitcoin's Short-Term Range
Last week, Bitcoin was forming a short-term range:
And since then, price has broken to new All Time Highs and there's potential for BTC to form a new short-term range:
Generally, the $100k level is a psychological resistance and this recent pullback is Bitcoin's way of telling us how strong this point of rejection really is.
At the moment, it's a resistance that has triggered only a -5% dip while also forming the very beginnings of a new short-term Lower High (blue diagonal).
So the question is - how wide or narrow will this brand new short-term range be?
Will BTC form a range somewhere between $91,000 (red) and $100,000 (black)?
Or will BTC take up the entire $91k-$100k range and even dip -8.8% into the old Range High (red) of $91k for a post-breakout retest?
Longer-term, this a very small dilemma to have.
Especially since we're aware that a Price Discovery correction lays ahead, though perhaps not too soon.
Yes Bitcoin is showcasing signs of Bearish Divergences on the Daily timeframe, but BTC isn't demonstrating that sort of weakness on the Weekly or Monthly timeframes, for example:
So perhaps a short-term dip could resolve this Daily Bearish Divergence, however as we saw as recently as a few days ago, BTC can still make new highs while forming Bear Divs.
Despite these Bear Divs, history suggests that Bitcoin could still enjoy some upside, as per the Price Discovery uptrend tendencies.
Price Discovery Uptrends & Corrections
In 2020/2021, Bitcoin experienced upside in its first Price Discovery uptrend (green box) for 5 straight weeks, before experiencing a -16% dip in Week 6, before rallying higher in Week 7 before experiencing another but shallower dip of -8% before resumed Price Discovery.
Thus, just based on 2020/2021, there is technically still scope for further upside in Price Discovery for a few more weeks before BTC experiences a deeper Price Discovery correction.