This week, Bitcoin price broke down from a bear flag pattern, setting a new local low around $7,300, and after some consolidation, broke back upward.
The resulting break out of a short-term pennant has led to a short squeeze of epic proportions, and nearly a $1,000 green candle that sent bears into hibernation and Bitcoin price over $8,400.
Bitcoin Price Blasts Upward To $8,400, Restores Confidence in Bull Market
After Bitcoin price broke down from a multi-month descending triangle, bears completely took control of the number one crypto asset by market cap, and were able to swat the price of the cryptocurrency down to as low as $7,300 this week.
Sentiment hit extreme lows, with the entire crypto community left in fear that the bear market wasn’t over, and a bottom may not be in. But today, the early signs of a reversal are forming, with a nearly $1,000 green candle striking fear into the hearts of overly confident bears.
The powerful upward movements caused any shorts from above to begin to cover their positions and close out – potentially now at a loss – to prevent from further losses or to secure profit.
Related Reading | How Bitcoin Fundamentals Have Strengthened Despite Bearish Price Sentiment
The bullish push is still underway, and currently trading at around $8,400 – to the shock and dismay of bears who had shorted Bitcoin from above. With such a powerful display from bulls, there’s potential that the move could spark a larger reversal in the bearish trend that was starting to take hold.
Such a strong movement may also be enough to un-cross a death cross of the 200-day moving average and 50-day moving average that occurred after last night’s daily close. A death cross is typically a signal that an extended downtrend is ahead, and an extremely bearish sign. This could be an attempt by bulls to prevent Bitcoin from entering a downward spiral that could put a new bull run off for some time.
Bull Trap, or Will BTC Reclaim Lost Highs?
Bitcoin is now nestled at the mid-range of the bear flag that had falsely broken down from, and could be targeting higher. During the trading range, Bitcoin set a high $8,800 – which could be the next logical target if bulls are able to hold prices above $8,400 and higher.
If Bitcoin price can take out resistance at $8,800, a restest of the breakdown from just under $10,000 could be in the cards. And if the leading crypto asset by market cap is somehow able to reclaim $10,000, talk of a return to the bear market should be silenced.
However, the entire move could be a final bull trap before more continuation down. How Bitcoin closes this week’s weekly close will be telling if the move was legitimate or if it was nothing more than whales taking advantage of retail traders who were overly bearish and in over-leveraged short positions.
