Could Bitcoin’s 6-Month Downtrend Be Coming To An End?

 | Jan 08, 2020 05:57

While it pales in comparison to previous bear markets (prominently including 2018’s 85% drop from nearly $20,000 to a low of $3,200), there’s no denying that sellers have been in control of bitcoin over the last six months. Since peaking just below $14,000 in late June, bitcoin has put in a consistent series of lower highs and lower lows, culminating (so far) with the mid-December low under $6,500.

Ho-hum, just another run-of-the-mill 50% crash in the world’s oldest cryptocurrency.

As any diehard bitcoin “hodler” will tell you though, developers continue to improve the underlying bitcoin protocol regardless of price movements. While the much-anticipated bitcoin ETF has yet to garner regulatory approval in the US, a series of other upgrades have come online in recent years, including the faster, cheaper “lightning network” layer-2 solution, as well as the space-saving Segregated Witness (SegWit) proposal. Looking ahead, developments like more efficient Schnorr signatures and privacy-enhancing Taproot could be future catalysts for improved functionality.

At the end of the day though, what traders are most interested in are the price movements, and from that perspective, there are some clear technical signs that bitcoin’s recent downtrend may be coming to an end.

Quietly, BTC/USD (BitfinexUSD) has rallied more than 20% in the past three weeks and is probing its highest levels since late November. More to the point, this rally has come in the context of a classic inverted head-and-shoulders pattern. For the uninitiated, this pattern shows a transition from a textbook downtrend (lower highs and lower lows) to an uptrend (higher highs and higher lows) and is often seen at significant bottoms in the market: