Alessio Rastani analyses Bitcoin's recent rally and whether the bear market is over
Alessio Rastani gives a chart-based update on Bitcoin's strong rally, arguing it is likely a bear market correction rather than the start of a new bull market.
Summary
Alessio Rastani delivers a solo chart update on Bitcoin, recorded outdoors at the site of Julius Caesar's invasion of Britain in 54 BC. He acknowledges Bitcoin's strong recent rally, which has broken above prior highs near 66K and pushed past the daily 200 SMA, but argues it is too early to declare the bear market over. His central thesis is that the current move looks like a three-wave ABC corrective rally — not a five-wave impulsive uptrend — and that the critical test will come when Bitcoin approaches the 50 SMA on the weekly chart, near the 78K–80K range. He outlines two scenarios: a successful break above the 50 SMA would increase the likelihood the bear market has ended, while a rejection there would raise the risk of another drop to new lows.
Key Takeaways
FULL TRANSCRIPT
Introduction and location
Alessio Rastani: Hey guys, hope you're well. This is a quick update on the chart of Bitcoin. Bitcoin has seen a very strong rally recently and it's exploded higher to some important levels, so let's dig into these charts.
Welcome back. Before we talk about Bitcoin, let me just first of all say that where I am talking is one of the most important places in history, because right behind me — those cliffs and this entire area — is where Julius Caesar, one of the key figures in Rome and in history, invaded Britain in the year 54 BC. Along this coast there would have been hundreds of ships. That was Julius Caesar's second invasion of Britain.
Bitcoin's recent rally and prior analysis
All right, let's talk about Bitcoin. We've seen a very strong rally in Bitcoin recently, and we've seen Bitcoin finally break out above the prior recent highs it had near 66K. This rally has also managed to blow past the daily 200 SMA — the simple moving average — which is the green line you see on the chart.
Now, I should say first of all that this rally we're seeing in Bitcoin was by no means a surprise. If you've been watching our member videos, I mentioned that as long as Bitcoin can remain above support, there is potential for Bitcoin to potentially move higher and reach some key levels and targets — for example, near the 70K–71K region. Overlapping structures are indicative of corrective patterns, which in this scenario would be quite bullish for Bitcoin, providing it can break through resistance. There is potential that what Bitcoin is doing is forming an ABC pattern, with a likely C-wave taking us towards that region. The odds increase for a potential bounce or rally — if not necessarily a bottom. Sometimes you may get a temporary bottom before some kind of intermediate rally, and sometimes it may actually even be a long-term bottom. But for now, as long as Bitcoin can hold support, there is potential for bulls to push Bitcoin into this region for a likely reversion to the mean. As I'm making this video, Bitcoin is in the range of 75K to 80K.
Is this the start of a new bull market?
I'm sure there are going to be some analysts who will say that this strong rally in Bitcoin is the start of a new bull market — potentially a new uptrend likely to take us into brand new highs. Now, they could be right, but personally I think it's too soon to call that, and I'm actually doubtful that this particular rally is the start of a new bull market to take us into new highs. I personally don't think it's likely, and the reason is that there is not yet enough information to tell us that the bear market in Bitcoin has ended.
Yes, some of you are probably thinking: how can I doubt that when we're seeing such a strong rally in Bitcoin? But we have to remember that even in bear markets, we get very strong, powerful rallies. So there is absolutely every possibility that this rally we're seeing in Bitcoin is nothing more than a bear market rally — or what is referred to in Elliott Wave theory as an ABC-type rally. As we can see on the chart, we have a three-wave rally: the A-wave, B-wave, and a potential C-wave. And one thing we know about C-waves is that they are very powerful, very dynamic, and strong.
So personally, I think that if we're still in a bear market on Bitcoin — which I think is likely — then this rally we're seeing from the lows made some months ago is quite likely a three-wave ABC rally, and we are probably in the C-wave of that ABC rally. That C-wave could take us eventually to the 50 simple moving average on the weekly chart.
The critical test: the 50 SMA on the weekly chart
If you look at the weekly chart of Bitcoin, you'll see the grayish-white line — the 50 SMA, the 50 simple moving average — sitting just near the 80K range. By the time price could potentially reach that level — and of course there's no certainty or guarantee that price will move there — but on the balance of probabilities, if Bitcoin is indeed rallying towards a test of that 50 SMA, my good friend Charlie Burton has mentioned previously in his videos that sometimes after strong drops and crashes, especially in bear markets, we see a counter rally go back and test that 50 SMA. In the next few weeks, that 50 SMA could converge with levels in the 78K to 80K range.
Here's what's important about this. What happens after Bitcoin tests or reaches that 50 simple moving average on the weekly chart is going to be key. If Bitcoin manages to successfully explode through the 50 SMA and continue to push through it, that potentially may increase the likelihood that the bear market has ended. However, if Bitcoin instead fails to push through the 50 SMA — in other words, if it gets rejected from that level — there could be an increasing sign of danger, and the risk could increase of another drop down to test the lows made some months ago.
So what Bitcoin does at the 50 SMA on the weekly chart — if it gets rejected at that level and then drops below support — could significantly increase the odds and the risk of a bear market continuation and another drop to new lows.
Why the current structure still looks corrective
So far, remember, this rally has been a three-wave rally, not a five-wave rally. Three-wave rallies are corrective in structure. Because what we've seen on Bitcoin so far is a three-wave structure, it is more likely we're dealing with a correction, not the start of a trend or an uptrend — because most trends begin with an impulsive, five-wave rally. And that is not what we're seeing on Bitcoin at the moment.
From this amazing place in Britain where Julius Caesar and his army reached Britain in 54 BC, I wish you a fantastic week. Bye for now. Cheers.