It is one week ago that we wrote Bitcoin Rejects $55.5k, Not Good. Even though BTC tried to go up again, it failed miserably. Such powerful trend in BTC, with the potential to move to +100k USD, is now clearly broken. BTC is almost completing a bearish topping pattern. What comes next is the million dollar question.
In our update last week we wrote this:
We identified 55,550 USD several months ago as a decisive level. Today we see that 55.5k USD coincides with channel support. So this is a double rejection, and this amplifies the importance of the rejection.
Note that this comes after a very complex consolidation which probably has been pretty exhausting for many crypto investors. The 3 rounded patterns on the BTC chart (yellow) show the complexity of the consolidation that started in February.
Why is all this important? Because BTC is the leading indicator for the crypto market. BTC sets the direction, all other coins follow. This dynamic may not work on a day by day basis, it certainly works on if we look at the trend on the daily chart.
In other words BTC is starting a cooling off period. Because of this the entire crypto market will be cooling off. That’s not a bad thing, that’s a good thing. Because a cooling off period can open the door for a new bull run.
And here comes the big question.
The million dollar question is (a) will BTC start an epic breakdown or will it start a consolidation above 47k (b) how will the outcome on the previous question impact altcoins.
It is hardly possible to forecast how exactly this will play out. Crypto is hyper-volatile, so a flat period is not very likely.
The daily chart below makes the point that 47k has been acting as solid support since February, but BTC is on the verge of a breakdown. Whatever happens at 47k will be telling, and crucial. We may see price consolidate above 47k, and it would be great for the long term. However, a breakdown below 47k would be painful, and it would considerably delay any move above 60k.
We still see that some select altcoins are doing well. A few select coins might continue to do well. But if BTC decides to start an epic breakdown it might break any bullish trend in any coin.
Bi-furcation in crypto land, but on steroids.
And how exactly this will play out, with the risk looming of BTC breaking down, is a really tough question to solve.
Note that premium crypto members receive several updates per week in which we cover the topics we brought up in this article. Premium crypto members receive weekly updates and one in-depth monthly update with plenty of crypto charts. The chart below is one of the many charts that premium crypto members received last night.