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• A Bitcoin bottom may be close according to a key indicator
• The Bitcoin Cloud Indicator suggests that the worst may be over following a 50% crash since May
• The current price pattern is mirroring 2018-2019

Bitcoin may well be bottoming out and forming a pattern close to late 2018, according to The Bitcoin Cloud Indicator. The Bitcoin Cloud Indicator is made up of a green line (21-day EMA) and a red line (200-day EMA) and highlights very clearly where Bitcoin is currently sitting in a market cycle, with bullish and bearish crosses being clearly indicated. Following four months of downward trending, the indicator suggests that the worst may be over and the general trend should be flattening out before a potential reversal.

Market State at a Glance

The reason why the Bitcoin Cloud Indicator is such a useful indicator for the long term investor is because you can see at a glance exactly what the market is doing without any fancy tools or other indicators:

What we can see from this is that the current stage of the cycle is almost equivalent to the bottom of the 2018-2020 bear market, with the market crash that has taken place since May echoing the November 2020 collapse which saw Bitcoin drop 50% in the space of a month. This collapse acted as the bottom of the bear market and kickstarted the next rally.

The exact same scenario has hit Bitcoin since May this year, with price falling from $40,000 to stagnate around $20,000 – another 50% drop, the same as 2018. This can be seen on the The Bitcoin Cloud Indicator, with the sharp drop that took place following the crash now tailing off and potentially beginning to form the rounded bottom that in early 2019 reinforced the notion that the market was on the verge of reversing.

Clearly however, with the global economy in a very different place than it was in 2018, we can’t be sure that a similar swing will take place in such a convenient fashion. While the chances of another 50% drop are unlikely without the help of a black swan event, it’s not unthinkable that rather than a curve back upwards we have a period of stagnation before the lines cross back again.

But when they do, you know what to do…