Bitcoin (BTC) finally seems to have completed a yearlong correction. We discussed in our previous analysis how most analysts and investors were wrong about calling the previous dip as the final wave of capitulation. That being said, the price of Bitcoin (BTC) did not fall significantly lower to complete what can now be termed as the final wave of capitulation. However, the weekly candle for BTC/USD did end up retesting the support to formally fill the gap down. If the circumstances were different we could have expected Bitcoin (BTC) to fall further. There would be no reason to call this the bottom. However, this time we have strong reasons to believe that this is the bottom and Bitcoin (BTC) is ready to climb up from here.
It may take months or years to reach the new all time high for all we know, but as far as the bottom is concerned, this is it. Let us take a close look at the BTC/USD weekly chart again. The price first started to correct in a very aggressive mode. The downtrend line for the first phase of the correction was the steepest. Soon afterwards, Bitcoin (BTC) broke this downtrend and it became the support. During the next phase of correction, the fall became less steep. The price finally settled atop the resistance turned support and then broke the downtrend resistance to enter another phase of correction. As we can see on the chart, this happened again and again. Over the passage of time, not only has the fall become less steeper, it has also decreased in magnitude as well as duration.
The first phase of the correction saw BTC/USD fall almost 70% in a period of 119 days. The second phase of the correction then saw the price drop almost 42% in a period of 70 days. The phase that followed saw the price drop almost 27% in a period of 49 days. The recent phase of correction saw the price fall 18% in a period of 28 days. As you can see the fall has become less intense and short lived with the passage of time. While previously the price had room to fall after breaking the previous downtrend resistance, this time the situation is different. If the price were to fall after breaking out of the current downtrend, it will have to settle atop the previous resistance turned support. That means that the price will actually be higher than the price of Bitcoin (BTC) during the previous phase.
In addition to that, we have the price of Bitcoin (BTC) testing a previous support on the 1H chart while forming a double bottom at the same time. The RSI is in the oversold territory which means a bounce up from here is likely. If the price were to continue going up from here, it would be considered as a strong buy signal as a double bottom will be confirmed. It is pertinent to note here that most bears did not expect the price to correct in the manner it has. Sure, most of them thought the price could drop to $4,000 but this is not the way most expected it to happen. As for the bulls who witnessed the last wave of capitulation during the previous cycle, they could have prepared for this.