Anyone who got into crypto for the first time in the course of 2020 has been pretty spoiled. The bitcoin (BTC) rate broke his then all-time high (ATH) at $20,000 before breaking record after record. However, the past few days have been dull in the market. Is this the calm before another storm?
The well-known analyst Lark Davis warns his 360 thousand followers on Twitter that there could be fireworks at the end of the week. On the daily chart, bitcoin forms a symmetrical triangle, a consolidation pattern. This pattern can be recognized because the price continues to fall highs but higher lows forms. This shows that there is some kind of equilibrium in the market, something that never lasts for long.
#bitcoin forming up a tasty little triangle on the daily. Expect volatility by week’s end. pic.twitter.com/Pw1rtDztbm
— Lark Davis (@TheCryptoLark) June 1, 2021
But which way will this volatility take? That, of course, nobody. However, one of Lark’s followers notes that this pattern is “normally a continuation pattern in a general downtrend.” To this Lark answers in the affirmative. This is of course no guarantee that the outbreak will actually take place downwards.
Another interesting fact in the current situation is bitcoin price relative to it stock-to-flow (S2F) fashion model. The price has in fact arrived at the bottom of the S2F bands, according to the Dutch analyst PlanB. He wonders “is the S2F model going to break? Or will this be a perfect buy signal after all?”
2nd bounce off the lower band of S2F model. Will S2F break? Or will this turn out to be an excellent buy signal? I know multiple hedge funds that actually trade this BTC-S2F “cointegration” (despite that we can’t formally use cointegration tests because S2F ratio isn’t random). https://t.co/lnnN6H7OL6 pic.twitter.com/qC3ULXlSlI
— PlanB (@100trillionUSD) June 1, 2021
The last time the price touched the bottom of this band was during the crash in March 2020. That crash was caused by the great panic after the outbreak of the corona virus. Should bitcoin make a similar bounce again, we would be close to or even above $100,000.
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