From the fractional trends from 2019, it looks like the ongoing weekend correction is the same as what happened between June and December 2019.
Historically, Bitcoin topped out at around 14k in June 2019 before going low the remaining part of the year. Several factors affected its prices, such as the bitcoin cash hard fork, the Libra project, and the politics revolving around President Donald Trump. It also received threats from the Treasury Secretary, Stephen Mnuchin, on its legalities.
In December 2019, the currency crashed to near 6500. This made it move to a 50-day simple moving average(SMA) so that it’s lower than the 200 day SMA, which may technically be referred to as a death cross. A death cross is a sign of extended sell-off coming.
During the same period, the Bitcoin bulls held a price above the 50 weeks SMA. This was followed by an attempt by the bears to crush the price below the 50-week SMA. But this was not possible because the bulls are in control of the dips. 50-week SMA led to an increase in buying actions, leading to a rebound towards the 61.8% Fib level, which was drawn from the $14k swing to approximately $6500 swing low. The 2019 fractal is an illustration of two bullish scenarios, which led to lower highs. It showed that the bears are weaker, then the price increased later.
As for the 2021 scenario, Bitcoin is following a similar trend to 2019 one. It started with a price correction from $65k, which landed the currency into a 50 week SMA support of around 30k. When it moves lower, it leads to a death cross kind of setup. Its price action last week indicates a bullish divergence, which is similar to the 2019 one.
In addition, a 50-week SMA support rebound can make the Bitcoin prices reach the 61.8% Fib level, according to a market analytics platform Tradingshot.
This year has not been a kind one for Bitcoin as it experienced a 41% loss, suffering its worst point in the last quarter. It led to a 43% sell-off since 2018. This indicates a negative, fundamentally caused by many factors such as China’s crackdown on cryptocurrencies.
Also, comments from key persons in the industries, such as Elon Musk, led to a drop in the currency’s popularity.
The Federal Reserve has also contributed to a decline in the price of Bitcoin and its demand. The US central bank indicated that it might increase its interest rates by the end of 2023 to curb the inflation rate, which coincides with the BTC/USD rate from June 16. Despite everything, bitcoin managed to survive above $30k, which is a psychological support level. Currently, it’s above 35k.
The high resistance level at $40k is making the crypto experience a short-term bearish market. Many expected that the $40k resistance level would move the currency down to $20k, but that’s not been the case.