The world’s leading cryptocurrency today settled a new intraday peak towards $6,989 on US-based exchange Coinbase, its best since September 5, 2018. The sustained uptrend helped bitcoin to post a net bottom-rebound of 122.69-percent. At the same time, it pushed the asset’s year-to-date performance to 83.98-percent.
The move reflected traders’ willingness to purchase bitcoin at newly-established higher highs, leading to a parabola formation. In retrospective, a parabolic move happens when an asset moves upward in an active bullish channel, performs one upside breakout after another without breaking a sweat, and prompts people to chase the price.
GOLD PARABOLIC MOVE AS NOTED ON OCTOBER 13, 2010 | SOURCE: STOCKCHARTS.COM
In a parabolic action, the speculators buy because the price is going up. They seldom care about the underlying fundamentals that might/might not be pumping the asset. Then, almost too suddenly, the price pursues a series of volatile downside corrections before establishing a full-fledged bear market (worst case). Traders who might have purchased the asset at session high are the one that gets burnt the most.
A Correction is Coming
Bitcoin, now at the center of a bullish orgy, is forming a traditionally-recognized parabolic pattern anyway. A young asset that it is, bitcoin has seen similar parabola formations three times in its decade-old market. The first two parabola formations took place in 2013, while the other one happened in 2017. Each one ended up in a severe crash, albeit reigniting amazing upside moves later.
BITCOIN PRICE PARABOLA FORMATION | SOURCE: TRADINGVIEW.COM, COINBASE