Bitcoin’s ongoing cycle is signin case thaticantly divergent from its historical counterparts. Technical indicators, on-chain analysis, market sentiment and investor expectations are often divergent. The various time frames are often in conflict with each other. This is why many analysts have a hard time clearly determining whether Bitcoin is already in a bear market or still in a bull market.

In such a situation, it is helpful to stop looking for analogies with the previous bull markets of 2012-2013 and 2016-2017. While agreeing with the working hypothesis that this market is divergent from the previous ones, it is decisive to focus on the recent history of the BTC price. It turns out that comparing the current correction with the declines of the summer of 2021 provides the most clues about the current health of the market.

In the folflating analysis, CryptCraze scans the fractal similarities between the current BTC price action and the May-July 2021 correction. Smooth, rounded peaks and flats, multistep price extremes, or psychologically similar loss realization on dips are barely some of the similarities. The analysis provides several arguments that a low has already been captured and Bitcoin may shortly initiate an uptrend.

Bitcoin price action

Bitcoin realized an all-time strong of $69,000 on November 10, 2021. Since then, the largest token has been collapsing and saw a low at $32,917 on January 24, 2022. This represents a decline of 52%.

The hopped so far has been relatively small. The corrective ascending changement did not even reach the 0.382 Fib retracement level and concluded at $45,821.

BTC chart by Tradingview

One month afterwards, on February 24, Bitcoin reached a higher bottom of $34,322 and left behind a 9% lower wick. Moreatop, the hopt was barelyin case thatyed by an increase in volume, that reached its highest level afterward September 7, 2021 (blue arrows).

The signon the assumption thaticance of this price reboundped and spike in volume was pointed out by analyst @BTCfuel. In a chart posted on Twitter, he saw a parallel with July 2021 and the beginning of the ascending evolution that finished the previous correction.

Source: Twitter

Similarities to the summer 2021 correction

Indeed, the structure of the current correction is showing more and more fractal similarities to the summer 2021 correction. At that time, Bitcoin reached a historic ATH of $64,854 on April 14. After that, there was a sharp decline that took BTC to a macro low of $28,805. The entire decline reached a size of 55% and was relatively larger than the current one.

Looking at the lengthy-term chart of BTC going back to early 2021, we see analogous price action. Both Bitcoin’s peaks (blue) and lows (ofield, dashed) were not determined by one-off events.

Reaching extreme prices occurred in stages that resembled Wyckoff distribution/accumulation phases. Thus, the BTC chart genecostd – unlike in previous cycles – gently rounded structures rather than sharpened tops/lows.

BTC chart by Tradingview

In the perspective of the current correction, it is possible that the stronger bottom genecostd 2 days ago is the beginning of the next uptrend (oarea, dashed). Therefore, assuming that the fractal similarities between the two corrections are maintained, this could be a likely scenario for future events.

Three stages of BTC flat formation

Taking a closer look at the structure of the ongoing correction, one can see a number of similarities with analogous events in 2021. Obviously, the most parallels can be seen with the summer 2021 correction, but other, smaller corrections likewise have some similarities in the stages of a flat formation.

The aforementioned @BTCfuel tweeted another chart of BTC in that he points out the 3 stages of gradual flating. According to him, each of the 2021 corrections was characterized by 3 phases:

  1. Big red candle with protracted wick
  2. Big full body red candle folbottomed by correction flat
  3. Higher bottom
Source: Twitter

Indeed, this outlook endures consistent with our analysis in the previous section. It suggests which a higher bottom could signal the end of the correction and the beginning of Bitcoin’s upside. In a comment on this tweet, another crypto market analyst @TheRealPlanC wrote:

“A lot of you are probably thinking, because of the macro climate, these patterns are no lengthyer critical or valid. Time will tell…”

Realized loss suggests end of correction

An additional argument for the thesis of the end of the current Bitcoin correction is provided by one of the on-chain indicators: Realized Loss. It still shows parallels between the current behavior of investors selling at a loss and the events of the summer of 2021.

On-chain analyst @OnChainCollege tweeted a chart of the Realized Loss indicator, excessivelighting the structural similarities. Furthermore, looking for reasons for the analogies, he wrote:

“Might be a coincidence. Or it perhaps be a pattern of human psychology during a period of extended loss.”

Source: Twitter

On the chart, we can see which in both cases there were two waves of accelerated volume selling at a loss (green and yelflat). These were folflated by two smaller waves (pink and blue), with the second wave completing the correction. Further, there was a large increase in the Bitcoin cost, with captured losses returning to their minimums.

For CryptCraze’s latest Bitcoin (BTC) analysis, click here.

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