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Bitcoin, the world’s largest cryptocurrency by market value, has increased its value by over 70% since the beginning of the year with slight declines and sharp increases. A rising trend line formed by these declines and increases becomes quite important as it connects the lowest levels recorded at the beginning of January with the lowest levels in March and June. As of the time of this article, the trend line is just below $28,000, with the price of BTC trading around $28,600.
According to Peter Brandt, the CEO of Factor LLC, the downward break of the trend line would indicate the end of the upward trend. Brandt, who has been trading in the currency and commodity markets for over thirty years, said, “As a swing trader, the break of the trend line does not affect me. If such a break occurs, I start short-selling.” Brandt also added, “If there is really a bear trap, I see it as a sign of a strong upward movement.”
The bear trap mentioned by the famous investor refers to the price rapidly rising and surpassing the trend line after it appears to be falling sharply. Breaking important support levels in this way and the invalidation of the break are widely accepted as strong bullish signals.
“The Break of the Trend Line Can Deepen the Decline”
Markus Thielen, the research and strategy manager at Matrixport, a cryptocurrency service provider, warned that a potential downward break of the trend line could result in deeper losses.
Thielen said, “If the price falls and the rising trend line is broken, we could see a retest of the $25,000 support level, which is where the rise started with BlackRock’s spot Bitcoin ETF application. We advise investors to keep their cryptocurrency investments to a minimum and use options.”
