Bitcoin is re-testing its “Legacy trend-line”
Everyone is so excited about Bitcoin halving. Many traders compare fractals from 2015 to what is happening right now, but everyone fails to look at the bigger picture properly. The most important difference between halving in 2016 and in 2020 is the preceding trend.
When you compare weekly RSI trend in 2020 and in 2016, you will see that we are still in a downtrend since June 2019, because Bitcoin couldn’t break above the red line on RSI indicator, while in 2016 there was a clear uptrend before halving.
There is one single line which defined the entire uptrend of 2016-2020. It was acting as a strong support in Dec’18-Jan’19 and also in Dec’19. However, in March 2020 Bitcoin broke below the black line and now it is acting as a strong resistance. In technical analysis, it is common for price to re-test the trend-line after its penetration, and more often than not price fails to get back above the trend-line.
One thing we know about halving is that the price will increase IF demand stays the same, but since June 2019 demand has been declining, sometimes too much, which triggered a short-term rally.
Needless to say, global economic conditions are entirely different from what we had in 2016. Most people say that crisis will increase Bitcoin price because of instability of the financial system. However, I don’t agree with this statement because price can only increase when people buy an asset, and during a crisis or a recession people have different priorities and they just don’t have enough money to buy financial assets.
We had a short-term rally after March sell-off, let’s see what happens next.
When you compare weekly RSI trend in 2020 and in 2016, you will see that we are still in a downtrend since June 2019, because Bitcoin couldn’t break above the red line on RSI indicator, while in 2016 there was a clear uptrend before halving.
There is one single line which defined the entire uptrend of 2016-2020. It was acting as a strong support in Dec’18-Jan’19 and also in Dec’19. However, in March 2020 Bitcoin broke below the black line and now it is acting as a strong resistance. In technical analysis, it is common for price to re-test the trend-line after its penetration, and more often than not price fails to get back above the trend-line.
One thing we know about halving is that the price will increase IF demand stays the same, but since June 2019 demand has been declining, sometimes too much, which triggered a short-term rally.
Needless to say, global economic conditions are entirely different from what we had in 2016. Most people say that crisis will increase Bitcoin price because of instability of the financial system. However, I don’t agree with this statement because price can only increase when people buy an asset, and during a crisis or a recession people have different priorities and they just don’t have enough money to buy financial assets.
We had a short-term rally after March sell-off, let’s see what happens next.
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