Long-term outlooks remain bullish, but traders are not ruling out more pain first.
Bitcoin (BTC) maintained $34,000 support on Wednesday as a rebound from six-month lows showed surprising resilience.
Bitcoin bulls see 2020 similarities
At the time of writing, Bitcoin was approaching $34,500 on the back of daily gains, which topped 15%.
While the latest price action did not convince everyone that the bottom was in, it frames the dip to $28,600 as a capitulation event on the back of negative news from China similar to the $30,000 flash crash in May.
For Mike McGlone, senior market strategist at Bloomberg Intelligence, there was little reason to reassess a long-term bullish view on Bitcoin.
He argued that $30,000 was just like $4,000 after the 60% price crash of March 2020 — a “line in the sand.”
“Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn’t ended well, and if the key question this time around is whether it’s different, we see a more-enduring bull market,” he explained.
Wyckoff signals spook traders
Among the more cautious voices, meanwhile, was popular trader Rekt Capital, who on Wednesday was keenly eyeing the potential for Bitcoin to fulfill a negative Wyckoff pattern to exit to the downside.
“In sum, if BTC loses this current downtrend wedging structure… BTC will breakdown into Phase E of Wyckoff Distribution,” he warned.
“If $BTC breaks out from here and rejects harshly from the red area above… Phase E could also lie ahead.”
China’s crackdown on mining, the main impetus for current price weakness, has divided commentators.
In an interview with mainstream media, Saifedean Ammous, author of The Bitcoin Standard and its sequel, The Fiat Standard, argued that miners forced to relocate from China were selling BTC that they otherwise would have held, creating additional price pressure.
He added that the coins involved may well have been hodled for a long period, increasing the bearish mood as monitors picked up movements of coins that had not moved for a noticeable length of time.