Moreover, Rekt Capital, and many others, are predicting a Bitcoin breakout and are shouting this news from the rooftops. Hold your horses. But out there in the crypto desert where the mirage of the ICO still shimmers, the optimism may be blinding me. So before you go betting the farm on this alleged new uptrend, let’s add some reality. Technical analysis is no crystal ball that can show the future. Rather it’s more like reading tea leaves—open to interpretation and frequently resulting in mistaken insights.

Questionable Downtrend Line Validity

That downtrend line everyone's celebrating Bitcoin breaking?… while this trendline is indeed valid and statistically significant. Or is just another arbitrary line on a chart that bears are using as a crutch for a bullish story? I’ve personally seen dozens of “downtrends” violate. The price soon makes an about-face, laughing in the face of technical analysis projections.

Think about it like this: you can draw a line connecting dots on any chart. And the real question, of course, is whether that line carries any weight. Is it really selling pressure, or merely noise in price action? I’m still not convinced this specific downtrend line carries enough significance to warrant the level of exuberance we have today. It comes off contrived; as though someone is reaching, clawing even, to grasp on to a bullish signal in the midst of overwhelming bearishness.

Weak Volume: No Real Conviction?

A breakout without volume is a car without gas – it’s not going anywhere. I get it, Bitcoin did temporarily close above that downtrend resistance. Where was the oomph? Where is the surge of buying pressure that typically comes with a real breakout into new all-time-highs?

I'm seeing lackluster volume, folks. This all indicates to me that the recent increase is driven more by optimism. Smart investors aren’t gambling on it at the moment. We have Jesus bubbles. This brings to mind the dot-com bubble. At that time, flaky startups with zero substantive revenue suddenly saw their stock prices soar based solely on rumors. We all know how that ended.

  • High Volume: Strong buying/selling pressure, confirms the price movement.
  • Low Volume: Weak conviction, potential for a false breakout.

BTC will need to continue to demonstrate real volume here to convince us this isn’t just another head fake.

Bearish Divergences Lurking Unseen?

So while everybody is preoccupied with the downside breakout, are they actually paying attention to anything else out there? So I’m noticing possible bearish divergences developing on the RSI and MACD. While the price may still be rising, these divergences are an early signal that the upward momentum is waning. This is a reliable warning sign that a top could be near.

Imagine you're climbing a mountain. You’re not at the summit yet, you’re getting closer but now you’re really feeling out of breath and your legs are feeling a bit wobbly. That's what a bearish divergence is like. The price continues to rise, yet the underlying bullish strength continues to wither away.

Let's not forget Ethereum either. Meanwhile, Rekt Capital is hoping that ETH can maintain its current range. The recent news that it lost its “black-black Macro Range” of $2,196-$3,900 is alarming. Losing important levels like that usually indicates more downside to come. Simply due to the fact that ETH is resting on a historical demand zone doesn’t ensure that it will stay there. Historical patterns are made to be broken, particularly in a more volatile market as we’ve seen in crypto.

This isn't about being a permabear. I just want you to be realistic. Don't get caught up in the hype. Do your own research. Consider the full set of indicators because nothing makes a worse impression than only looking at the metrics that reinforce your assumptions.

Bitcoin could be facing a real breakout for a change. In the absence of all that, based on what I’m seeing I think it’s far more likely that this is just a mirage. A perverse gambit of the crypto wasteland, designed to bleed unscrupulous investors dry. Be careful out there. Your financial future depends on it.