Bitcoin could have a V-shaped recovery, according to PlanB

Bitcoin price (BTC) has been consolidating for more than two weeks after experiencing one of the biggest crashes in crypto history. Although the market has calmed down and curbed further declines, we are not seeing a quick V-shaped rebound.

However, the possibility of a V-shaped recovery remains. One of the most popular analysts in the crypto space, PlanB, has suggested that this could happen soon. A clear pattern in the crypto options market is expected to have a large impact on BTC price this year.

PlanB discusses V-shaped recovery

In a recent tweet, PlanB, the creator of the BTC stock-to-flow model, presented a chart of this year’s BTC price history. It marks a time of decline and recovery. They all follow a similar V-shaped recovery pattern.

BTC / USDT daily chart | Source: TradingView

By far the largest drop occurred last month on May 12-19. At that point, Bitcoin fell from around $ 57,000 to as low as $ 30,000.

PlanB has marked this area as the longest isosceles triangle. It also puts a question mark and wonders if the pattern will form again.

In this case, the benchmark cryptocurrency could rise more than 50% in the coming period.

It should be remembered, however, that since the start of the year price development most likely follows a Wyckoff distribution pattern. After closing, one would not expect an immediate recovery to highs, but a longer period of accumulation.

Monthly option contract expires

PlanB argues that its V-shaped recovery hypothesis is based on periods of illiquid and illiquid trading at different times of each month.

Since the beginning of the year, the bullish momentum clearly set in in the first few weeks of the month. In addition, there was also a decline in the second half of the month.

Such behavior by traders is often cyclical. It coincides with the expiration of derivative contracts in the crypto options market, including the futures market.

Traders open positions at the beginning of the month, usually the first Monday. These options expire and positions are usually closed on the last Friday of the month.

As shown on the chart by another Twitter user, @ T6nis05, Bitcoin price makes a local low (blue line) every last Friday of the month, followed by a sharp rise.

BTC / USDT daily chart | Source: Twitter

If the situation repeats, we will see a bull run at BTC starting May 28th. In fact, Bitcoin’s price is up 18% since last Friday.

It also attempted to break above the symmetrical triangle that formed from the May 19th low.

Unfortunately, it turned out that the outbreak was fake. At the time of writing, Bitcoin is back within the triangle at around $ 36,500.

However, this move does not preclude the V-shaped recovery from continuing in the days that follow.

BTC / USDT daily chart | Source: TradingView

However, it should be remembered that the Bitcoin decline in May was one of the biggest crashes in the entire history of the cryptocurrency market.

An immediate recovery to all-time highs is therefore questionable. However, cryptocurrencies can surprise us – they always do!

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

SN_Nour

According to Beincrypto

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