The price of Bitcoin has been moving sideways since July 24, when it fell to $29,000. It has been hovering around $30,000 with low volume and volatility and formed a horizontal range.
With its July 13 high of $31,730 being the yearly high, could this sideways movement be interpreted as redistribution before a significant move? And if so, where is Bitcoin likely headed?
From November 21 when the price fell to $15,500, we have seen the start of an uptrend that recovered it by 105% measured to its highest point in July. An ascending channel formed, which is typical for an uptrend.
From June 14 it retested the ascending channels support level and bounced from it once more at $24,820 making another higher high. July high was only a minor one with a 4.5% difference from the prior one made in mid-April.
Some cryptocurrencies didn’t make a new higher high in July compared to April’s, like Ethereum, Binance coin, Cardano, and so on.
This minor difference shows us that momentum is slowing down as with each push, buyers have less strength, and taking into account that generally speaking, the market as a whole (total cryptocurrency market capitalization) hasn’t reached a new yearly high in July, we can definitely conclude the diminishing momentum.
The sideways range from July 24, came after the price made a dip below the $30,000 mark and now we are seeing yet another interaction with the ascending channel support level.
If a breakout occurs to the downside, which looks highly likely, that could be an early signal of the starting downtrend.
In some of our previous analyses, we have pointed out that the price of Bitcoin has two scenarios in play – a bullish one and a bearish one. In a bullish case, the price is going to make a final attempt to continue its uptrend resulting in another higher high and is then headed for its first major correction to $20,000.
Alternatively, according to a bearish scenario, July high marked the completion of a bear market correction and is now headed to a new bear market low of potentially $11,000.
Considering the negative context we are currently in let’s revisit the bearish scenario.
On the daily log chart above from Coinbase, we can see that the price made a corrective Elliott Wave count of 3 waves until November 21, from mid-April 2021. The main difference between a bullish and a bearish scenario is whether or not the bear market ended in November as an ABC correction of the highest degree. Looking at the sub-waves the possibility of we are in wave 4 from the higher degree wave C on the rise from June 18, 2022, is high.
This is so because from June 18 there was some positive price action but it resulted in a lower low in November, and the wave structure from August to November doesn’t appear to have been the ending bear market wave.
Instead, according to this count, the rise from November until now is the third sub-wave of the ABC correction from June 18, 2022.
If this is true, then a larger descending move could now lead the price of Bitcoin to a final bear market low.
Since Bitcoin already fell below its previous bull market ATH, it is likely to continue down to its next significant support point on the expected downfall which is around $11,000.
As stated, there is also a bullish case to be made, in which the price started its bull cycle on November 21. If that scenario is in play, the price should now make a final higher high to $35,200 before falling back down to $20,000 on its first major correction.
This is why the currently seen interaction with the ascending channel support level is going to be important.
If the level gets broken and the price starts falling down, then the likelihood of a bearish scenario increases. But if the level holds and we see a bounce, the price will likely be headed toward the $35,000 zone.