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Home Cryptocurrency news

Comparing Current Bitcoin Breakout To Historic October China Rally

Tony Spilotro by Tony Spilotro
1 year ago
in Cryptocurrency news, Bitcoin
Reading Time: 3min read
bitcoin price breakout crypto
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Last week, Bitcoin price broke out of its 45-day long consolidation range in the low $7,000s and rocketed to over $8,000 where the first-ever cryptocurrency is holding tight above resistance turned support.

The strong move is the first rally since the historic October pump driven by news that President Xi Jinping spoke out in support of the blockchain technology Bitcoin is built on. But how do the two rallies stack up and what can we learn about the differences or similarities between the two?

Comparing the October 2019 China Pump Against Bitcoin’s Latest Breakout

It was late October, and Bitcoin price had just fallen through support around $7,400 after spending 30 days consolidating to set a new local low when Chinese President Xi Jinping urged his country to stay on the forefront of developing the future through the blockchain technology that cryptocurrencies like Bitcoin and many others are built upon.

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Related Reading | Bitcoin Is Fearfully Following Former Bear Market Fractal, New Lows Possible

The nod of support caused a FOMO effect and feverish buying of the leading cryptocurrency by market cap. Not only did the ferocity of buyers drive up the price of Bitcoin, but those who shorted Bitcoin on the way down were also forced to close out their positions, further driving up the price in a massive short squeeze.

The resulting move was Bitcoin’s third-largest single-day gain on record, however, the rally failed to find solid ground above $9,000 and plummeted back down to lows around $6,500.

For the record the Xi pump broke the downtrend on high volume.

So we already technically "broke out" once.

it failed.

That was a 30 day consolidation period.

The recent one was a 45 day consolidation period. pic.twitter.com/92wVR4iqjo

— CryptoISO (@crypto_iso) January 13, 2020

There, the first-ever crypto-asset spent another 45 days consolidating, 50% longer than the previous phase, before rallying once again. But because even a record-setting rally failed to spark enough buying interest, bulls are being extra cautious with the current surge in Bitcoin price.

Considering that the entire China rally retraced completely, its clear now in hindsight that the pump was distribution. At the top of the pump, Bitcoin price spent 12 full days consolidating before it ultimately broke back down. It’s only been seven days since the latest pump first began.

The China news-driven rally also broke through a number of important moving averages, including the 200-day MA, but ultimately fell back through them. Analysts that are now eying that Bitcoin price is currently stabilizing over the 100-day MA should remember this important factor, as Bitcoin very well could fall right back through it.

Related Reading | Psychology of a Market Cycle: Are Bitcoin Investors In Denial?

Because Bitcoin price broke out, crypto hopefuls want to believe that “this time is different” in terms of the two pumps, however, if the leading cryptocurrency by market cap is still in a downtrend, this pump also could be nothing more than distribution before the price gets marked down to the next trading range. Stay cautious.

Tags: bitcoinchinacryptodistribution
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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