Bitcoin (BTC) pumped more than 43% in two days and that got a lot of retail bulls very excited. However, at the same time it made many traders very concerned because that was an unprecedented move not because of why it happened but how it happened. Just before that move happened, we expressed the strong probability of further upside in BTC/USD because it was long overdue. However, the manner in which the price pumped was an extreme case of manipulation which raises the question, “why were the big players so desperate to do this?” If we look at the price action on the 4H chart for BTC/USD, we can see that temporary bullishness is induced in the market which is then followed by long wicks left to the upside. Why are the big players trying so hard to keep the bears away this time?
The recent pump in Bitcoin (BTC) was not just a manipulated pump; it was a pump that pushed the price above the 200 day EMA. That was the trigger that got the bulls all excited again and that is why you saw even some of the most respected analysts suddenly stop talking about a decline to $6,000 and start talking about the beginning of another uptrend from here. The price keeps on trading sideways trapping in more bulls who think the price will just shoot up after some temporary consolidation. It also keeps shaking out bears who are trying to short the market here by running their stops over and over. Meanwhile, the S&P 500 (SPX) is on the verge of a brutal decline that could begin anytime now. The previous decline in the stock market was extremely devastating for the cryptocurrency market but this decline is going to be even more devastating because there is a lot more room for decline this time.
Bitcoin (BTC) is trading sideways because it is at a decision point. The daily chart for BTCUSDLongs shows us what decision point that is. BTCUSDLongs has now run into the 38.2% fib retracement level. If it starts to decline from here, then it would break the uptrend that came into effect just around the beginning of Bitcoin (BTC)’s parabolic advance in May, 2019. This means that the next crash in Bitcoin (BTC) would also be the beginning of a downtrend in BTCUSDLongs.
This will be very significant because the last time we saw a trend reversal in BTCUSDLongs, Bitcoin (BTC) broke market structure and declined below $6,000. This time however, we are looking at a far more devastating decline because once the price plunges below the 200 day EMA it is likely to remain below it for a long time until Bitcoin (BTC) finds its true bottom below $3,000. Considering the state of manipulation and foul play in this market in the absence of regulation, I think things are going to get a lot worse in the near future. The bears have experienced maximum pain and now the big players will turn to the bulls. When all of it is over, the shattered confidence would take far too long to recover and it would be a very long time before we see a new all-time high in Bitcoin (BTC) again if we see one at all.