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Blocksmith Says: Bitcoin’s Potential Upside Breakout Retraced

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The promising base and potential upside breakout set up in bitcoin yesterday has been sharply retraced in the current session in pretty much the same way as the two day lift at the end of May was sharply retraced almost completely on 1 June.

This frustrating and seemingly random price distribution could either be the start of a continuation lower or just a false signal to the downside ahead of another attempt higher. This snap crash and rebound sequence is not uncommon in markets as price tries to settle before a push.  The preferred view remains for a recovery.

Looking at blue chip crypto ETH and BTK, the average change across today and yesterday’s last price is -5.86% in line with the -0.56% average overall pullback seen in in Europe, the US and Japan overnight.

The chart shows the Ethereum vs Bitcoin spread testing the bottom of the December 2021 down channel and with RSI attempting a bullish reversal from the most depressed it has been since the end of 2019.  Ease of movement down looks to be impaired at these momentum and price levels, meaning that this is more likely an upside reversal set up than that of a downside continuation.