Bitcoin (BTC) seems to have made a higher low for the first time since the beginning of the downtrend. The price is currently trading above $6,300. Every day the price of Bitcoin (BTC) stays above the $6,000 mark in the days ahead, market confidence is expected to increase by leaps and bounds. In fact, the recent development with a higher low (HL) appearing on the BTC/USD 1D chart is the first of its kind since the beginning of the year. This is a strong indicator that this correction might be coming to a close as further downside seems unlikely at this stage.
There is a possibility though that Bitcoin (BTC) could exit the downtrend in the days ahead and then continue to fall down to test the support line. However, in any case, a fall and close below $6,000 on the monthly chart seems highly unlikely. It should be noted though that if it does manage to fall and close below $6,000 on the monthly chart, any hope of a reversal will be completely lost as a new bearish market, at least for the next six months will take over as the new setup. On the other hand, if the price breaks the downtrend but then falls lower to test the support line, it would mean that the correction might drag on probably till the end of the year. This is also the most popular sentiment at the time so caution should be taken considering Bitcoin (BTC) does the exact opposite of what the mainstream investor thinks most of the time.
Another likely scenario is that the price breaks the downtrend in the days ahead and continues to rise from there with minor retracements along the way. This would mark the beginning of the next bull run and price could be expected to rally the same way it did in 2013. Positive catalysts that could trigger such a rally may include a Bitcoin ETF, major partnerships with large corporations, or favorable regulations from government bodies like the Securities and Exchange Commission. This seemed to be the most likely scenario since the beginning of the year but somehow, dominant bearish sentiment during the correction has made it a contrarian view. So, while it is considered a possibility by some, they are relatively fewer in number and often considered contrarians in this space.
The squeeze momentum indicator on the BTC/USD 4H chart indicates that bears are not confident to take risk at this point. The volume is currently low but the momentum could soon shift in favor of the bulls with some positive news. The higher low as seen on the 4H chart, if followed by a higher high would be the beginning of a bullish rally that could see Bitcoin (BTC) exiting the downtrend before the month of August. The commodities market as a whole is poised for a big run up and it is likely for Bitcoin (BTC) to begin its new rally with the rest of the market in the days to come.