As Bitcoin (BTC) tries to hold the $74,000-$75,000 area, one analyst suggested the flagship crypto could see another 10% rise towards a key area, but warned this level could be the ceiling.
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Bitcoin Double Bottom Breakout Aims for Key Level
In an analysis on Wednesday, crypto analyst Rekt Capital shared the outlook for Bitcoin’s potential rally as it holds the $73,000-$74,000 area as support for the first time in a month.
The analyst marked that BTC’s price continues to move between the 2021 and 2024 all-time highs (ATHs), which have been a key resistance area since the early February correction.
Following the recent market rally, the flagship crypto retested the 2021 ATH as a new support level on the weekly time frame but was ultimately rejected for the 2024 ATH during last week’s close.
According to the analyst, if Bitcoin can close weekly above the 2024 ATH, which is around $74,000, the price could rise to the high $70,000s. “Until that confirmation, however, the price will remain sandwiched between the old All Time Highs of 2021 and 2024,” he added.
Rekt Capital also noted that BTC has done so formed a double bottom pattern on the weekly time frame, and is now “pressing past resistance” of the formation. As he explained, the cryptocurrency would need a weekly close and a retest after the breakout from the top of the double bottom, around $72,810, to confirm a breakout.
If it confirms a breakout from this formation, the price could rise towards the $81,000-$82,500 area in a measured move. Nevertheless, the analyst cautioned that given the stage of the market cycle we are currently in, price will likely develop a macro market structure that will “appear sufficiently bullish to ultimately fail over time.”
“The failure can occur as a result of rejecting the Double Bottom resistance, by failing to retest after the breakout to register a fake breakout, or by failing to achieve a Measured Move once the breakout is confirmed.”
BTC looks similar to the 2014 breakdown
Rekt Capital also analyzed BTC’s historical behavior to assess the potential failure of the ongoing rally. The analyst noted that whenever Bitcoin breaks out of its macrotriangle formation, the price usually reverses until it forms a bear market bottom. However, the way the cryptocurrency does this varies from cycle to cycle, he explains.
In 2018 and 2022, the collapse led to a very rapid bearish acceleration towards the lowest accumulation period in the bear market. On the contrary, Bitcoin consolidated below the triangle base in 2014, retested it and saw another move down.
This time, BTC’s performance resembles the 2014 collapse as it consolidates behind the triangle base after its loss in January. According to the analyst: If the cryptocurrency continues to mirror its 2014 performance, the price could consolidate for a bit longer and possibly rise to the base at $82,500 before being rejected.
“Additionally, Bitcoin tends to build large consolidation periods based on the collapse of the macro triangles. In 2018 and 2022, these large consolidation periods developed at the bottom of the bear market,” Rekt Capital explains.
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“While Bitcoin built two such periods in 2014: just below the macro triangle where it broke out, and later at the respective bear market low,” he continued.
The analyst concluded that if history repeats itself, BTC’s current consolidation could precede an additional downtrend, and another major consolidation period could develop during the bear market bottom.
Featured image from Unsplash.com, chart from TradingView.com