Volume Pattern Suggests That a Big Move in Bitcoin Is Imminent
Contributed Opinion

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It's been quite a while since we last took a good look at Bitcoin, a reason being that, following the sharp runup from early April through mid-May, I have been waiting for the picture to become clearer. It would have been good to post an update when it dropped down into buying territory in March and April, but in the January article it was at least stated that "If this support is breached it could drop quickly back to the $75,000 area near to the rising 200-day moving average where it will be a strong buy."

And in the event, that is exactly what it did.

The January update was rather ambivalent because, at the time, it was observed that while the larger trend remained up, there was scope for significant corrective action, and this is how it played out.

The January / April correction served to unwind the seriously overbought condition that had developed by late last year, and even though the price has since bounced back following this flushout and has even made new highs, it is now not overbought at all, as we will proceed to see, and is thus in position to forge ahead once nearby resistance is overcome.

On its 6-month chart, we can see how the January / April correction actually took it some way below its rising 200-day moving average, but after this, it recovered strongly with a vigorous rally from early April through mid-May. This rally caused it to become substantially overbought again, hence the subsequent correction which has taken the form of a gently downsloping trading range that resembles — and may be — a bull Flag which is made more likely by the bullish volume pattern and strong Accumulation line which has made new highs even as the price has drifted sideways / down in recent weeks.

Note that upon it breaking out the top of this trading range, a strong upleg is likely to ensue, but also that the price may be forced into a short-term dip first by the resistance, quite possible from this position, which will be viewed as a buying opportunity.

Zooming out via the 3-year log scale chart, we can see that the steady uptrend that began at the start of 2023 is still very much in force, with no sign of it ending soon.

On the contrary, the bullish volume pattern as the price has moved sideways overall this year and the strong Accumulation line that continues to make new highs suggests that Bitcoin is likely to continue to advance, especially as the price is mid-channel and it is not overbought at all on its MACD, which means that there is plenty of scope for substantial gains over the medium-term.

Zooming out again via the 12-year arithmetic chart, which shows pretty much the entire history of Bitcoin, this picture is likely to make many investors feel queasy as it makes clear that Bitcoin has already made massive gains, and so might be close to topping out.

However, we should keep in mind that these are extraordinary times with the entire fiat money system not just "heading for the rocks" but already on them, which is why capital is fleeing into cryptos and gold for relative safety.

Bitcoin and cryptos are also being supported by governments, especially the U.S. government, as a "trojan horse" to seduce the gullible populace into accepting the impending CBDC rollout which is why they are thought to be relatively "safe" investments for the time being and is therefore a reason why Bitcoin could yet go much higher.

It should therefore be a source of comfort for Bitcoin aficionados to see our last chart, which is a log scale chart for the same time period as the last one, 12 years.

This chart looks a lot less scary, and it actually makes clear that Bitcoin has been in a huge so far orderly parallel uptrend from its late 2017 highs to the present.

Since it is still below the middle of this channel following its lesser order uptrend from its late 2022 lows, it is clear that, should it advance to the upper rail of this channel again, it will result in very substantial gains, even in percentage terms, from the current price and that is very possible in the crazy financial environment we are moving into, and needless to say, gold and silver should perform very well indeed during this period for similar reasons.