After falling below a crucial support level, Bitcoin (BTC) is attempting to recover some of its lost ground. An analyst suggested that this week’s performance will be decisive for the cryptocurrency’s next trend.
Over the weekend, Bitcoin lost its post-breakout range for the first time in three weeks, falling to a local low of $112,296 on August 3. The flagship crypto had been trading between the $114,000-$120,000 range since the early July breakout, hitting its all-time high (ATH) of $122,838 amid the rally.
Following its recent price action, the analyst considers that this week’s performance will be pivotal to see whether the pattern’s bottom, around the $117,200 area, will become a new resistance and confirm the breakdown, or if the flagship crypto’s price will recover the structure.
According to the analysis, if the price can reclaim the structure, the correction would be considered a fake downside deviation before resynchronizing with the pattern.
Meanwhile, turning the pattern’s bottom into resistance would be a bearish retest, confirming the breakdown, and potentially leading to a new retest of the $112,000 area as support.
Rekt Capital also detailed that this week’s performance will determine the future of BTC’s second Price Discovery uptrend, which has technically started its fifth week.
Depending on what happens to the Bull Flag (reclaim or a confirmation of the breakdown), we will know whether the Price Discovery Uptrend 2 will continue or whether BTC has experienced a very short PDU2 instead.
If Bitcoin reclaims the Bull Flag and challenges new highs, then its second Price Discovery uptrend will progress according to its historical tendencies.
However, if it fails to Weekly Close above the pattern’s bottom and confirms additional downside, the second Price Discovery uptrend would have ended in Week 2, much quicker than has historically been the case.
Moreover, it would reveal that BTC has been in its second Price Discovery Correction, which “would be going completely against the grain of history.”
The analyst suggested that macro-wise, Bitcoin still has plenty of time for a third Price Discovery uptrend. If the second phase has already ended, a final uptrend could overcompensate for the current uptrend’s underperformance.
