Bitcoin (BTC) has once again crashed hard in the past 24 hours and traders have reasons to believe that we are due for another December, 2018 styled correction in the days ahead. If we compare the two fractals on the daily chart, it is not hard to notice the similarities. Both of the times BTC/USD was trading inside a triangle and both of the time the price consolidated for a long time before making a decisive move. As both the fractals have a descending triangle, most retail traders innocently assume that the same setup is at play and the price would once again crash hard in the days ahead. While that may still happen, we have reasons to believe that there is a strong probability that it may not and retail traders will walk into the bear trap that we have been talking about in our previous analyses.
Market movements around turning points are the epitome of deception. Let me explain how exactly that is. If we look at the first fractal between August, 2018 and November, 2018, we can see that BTC/USD was trading inside a descending triangle. Then all of a sudden around mid-October, the price broke above the triangle and even rose above the 200 Day MA. Eventually, it closed below the 200 Day MA but still above the descending triangle. This led to debates regarding how a few whales had bought at what they considered to be the bottom and the whales dumped on them. Now, at this point, the retail traders thought that this showed a strong level of interest in Bitcoin (BTC) and that the price is gradually going to rise in the days ahead. However, the professional knew at that point what exactly was going on.
The break to the upside was a classic case of market manipulation which fooled retail traders and investors into thinking the market was ready to begin a new cycle. Most of them expected that to happen anyway since the price had found strong support atop its market structure. However, over the days that followed, the inevitable happened and the price crashed hard for weeks leaving a lot of retail traders with big bags. This was a clever bull trap that caught most investors off-guard who were not able to sell their bags on time and when the whales pulled the plug it was too late. Now, coming to the current fractal between mid-December, 2018 and now we can see that everything looks the same except there is no break to the upside. Everybody and their cousin are expecting a break below the triangle and a fall towards $2,900 or lower levels like $1,800.
To think that the price would fall to those levels just when everybody expects it to should be reason enough in itself to believe that it won’t. However, the majority always gives into sentiments and this is why the whales are always able to get away with their schemes. If we look at the monthly chart for BTC/USD, we can see that Bitcoin (BTC) has never been in a bear market. It has been in a bear trend but not in a bear market. This is because it has always remained within an ascending channel and sometimes broken above that channel but never below the ascending channel. This goes on to show exactly why BTC/USD has never once closed below the 200 Week MA in its entire trading history.
The majority of traders and speculators that are bearish on Bitcoin (BTC) short term understand full well that the price is due to increase long term. This is why we have seen corrections along the way but Bitcoin (BTC) has never been in a bear market. For Bitcoin (BTC) to enter a bear market, we would first have to see a break and close below the 21 Week MA. When that happens, we will have to see it fall to the bottom of the imaginary descending channel shown on the chart. If and when that happens, Bitcoin (BTC) would have to remain in a bear market for the next five years or so and all the major players who have big stakes in this $100 billion dollars (small) market can kiss their investments good bye should they fail to protect against such a fall. This should explain why it is not likely to happen in the first place.