One of the most prominent technical analysts in the crypto community believes that Bitcoin has yet to meet one last condition before it enters the next bull market. 

Peter Brandt, a 45-year trading veteran, recently expressed his views on the different factors that could lead Bitcoin to begin a new parabolic advance. 

The renowned analyst maintains that the multi-year channel where the flagship cryptocurrency has been contained since 2015 was able to prevent a further drop. The lower boundary of the channel served as a significant support level allowing BTC to surge over 30%. Bitcoin went from trading at a low of $6,480 on Dec. 18, 2019, to a high of $8,440 on Jan. 8, 2020. 

According to Brandt, the bullish impulse was predicted by a head-and-shoulders pattern that developed on BTC’s 1-day chart. When this type of technical pattern forms at the bottom of a bearish trend, the chances for a trend reversal increase. 

Under this premise, the author assumes that the head-and-shoulders formation can be interpreted as another sign that Bitcoin will soon enter a new bull rally.

Nevertheless, Brandt pointed out that there is still one more obstacle that the pioneer cryptocurrency has to overcome before it turns bullish. 

The trading veteran argues that Bitcoin needs to break out of the six-month long descending channel where it has been trading since late June 2019. Additionally, he expects that a massive capitulation by the “crypto bulls” will occur before the next bull run. 

“If enough cryptocultists have been shaken out since Dec ’17, then ‘yes.’ If not, then ‘no,’”, said Brandt. 

A look at BTC’s 1-week chart puts Brand’s analysis into perspective. 

After peaking at nearly $14,000 in June 2019, Bitcoin went through a corrective phase that saw its price drop over 50%. The downward movement has been contained by a descending parallel channel. 

Each time the flagship cryptocurrency hits the bottom of the channel, it bounces off to the middle or the top. Conversely, when it climbs up to the top of the channel, it plunges back to the middle or the bottom.

The most recent 30% upswing allowed Bitcoin to reach the top of the channel once again. However, the volume behind it was not significant enough to push it to break out of the descending parallel channel. If this technical pattern continues to hold, then BTC could plummet to the middle or the bottom of the channel, like it has done it over the last six months. 

A spike in the selling pressure behind Bitcoin could test the 61.8% and 65% Fibonacci retracement level. 

Closing below this significant area of support could trigger a massive sell-off too, sending BTC down to the 78.6% Fibonacci retracement level at $5,500. Such a bearish move could ignite the “cryptocultists” capitulation that Peter Brandt is waiting for. 

It is worth noting that an increase in demand could jeopardize the bearish outlook. If Bitcoin is able to close above the 50% Fibonacci retracement level at $8,500, it could foster FOMO (fear of missing out) among investors. Then, BTC would likely aim for higher highs. 

Different technical analysts saw the move above $8,300 as a definitive sign that Bitcoin had entered a new uptrend. Meanwhile, there are those who interpreted it as a retest of the upper boundary of the descending parallel channel.

According to crypto trader Scott Melker, the different perspectives rely on traders’ bias when they first open the BTC chart. Regardless of personal preferences, Melker argues that neither idea is right or wrong as both of them offer actionable information. 

Due to the ambiguity that Bitcoin presents at the moment, the $1,600 range between the 50% and 65% Fibonacci retracement level can be defined as a reasonable no-trade zone. Breaking above or below this area will determine where BTC is heading next. 

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