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The month of February was a rocky one for bitcoin but the digital asset had managed to come out ahead in the end. After suffering three long months of red closes, bitcoin has finally recorded its first green month. This is attributed to the rally that began at the end of the month. However, this is not the first time that the digital asset would mark such a trend and past performance helps to speak to what can be expected from here from the cryptocurrency.
1st Green Month Close For Bitcoin
Since hitting its peak in November, bitcoin has consistently closed the following three months in the red. It continued to struggle in this pattern until a late February rally broke and saw it close in the green once more. This marks the first green close after three red closes. It is significant given the trends that have been triggered in the past by occurrences such as this one.
Related Reading | Short Traders Decimated As Bitcoin Barrels Past $43,000
The most recent one-month green close after three red closes had occurred in July 2021. Now, recall that in July of last year, bitcoin had come out of a peak and headed into three months of straggling prices. However, after making the July one-month green candle, the price of the digital asset had rallied to a new high following the support of the 1 week MA50.
Another instance of this was the June 2015 one-month green candle that formed after three consecutive red months. What had followed was what was effectively the bottom of the 2014-2015 bear market and the start of the next bull rally. The same was the case with the February 2019 and December 2011 one-month green candles that formed after consecutive red months.
Going by this previous history, this could mean that the digital asset is gearing up for another bull rally. It would be especially convincing given that the price of bitcoin continues to trade above the 50 moving average.
But It’s Not All Good
One constant thing with bitcoin is the constantly changing trends. As such, the case of a green candle following three or more consecutive red months has not always spelled a bullish future for the digital asset. Sometimes it has meant the exact opposite, being the thing that finally pushes BTC back into another bear trend.
BTC closes in green after three red months | Source: BTCUSD on TradingView.com
This was the case with the October 2019 one-month green candle that formed after three red months. The price of the digital asset had dropped to a new low following this as the 1 week 50MA had failed to hold as it had done previous times. The same was experienced in November 2014 that pushed the asset towards a new low after failing to hold the 1W MA50 support. In May 2014, this happened again, reaching a new low.
Related Reading | Bitcoin Breaks Above 50-Day SMA, Will BTC Ride It Out To $50,000?
The common occurrence for all of this has been bitcoin failing to hold above the 1W MA50. This means that for bitcoin to start a bull rally, the price will have to hold above the 1W MA50. Failure to do so may very well send the market towards new lows, which at this point would be a drop below the $30,000 level.
Featured image from CoinDesk, chart from TradingView.com
