Anyone who has been following the market lately knows that bitcoin has had several consecutive red closes. There is no need for alarm, as the digital asset has a history of marking downtrends like these and riding out of them. But this trend will not be the same after the cryptocurrency experienced its 7th straight red close.
It would be the first time in history for bitcoin to mark such a trend. However, what is even more important is what seven consecutive red candles mean for the cryptocurrency. A close like this could trigger even more selling as investors worry about the near-term future of the coin.
Also, with so many red candles on the charts, it could indicate that there is still a downtrend to follow. An example of this was marked in the 2014 bear market which saw bitcoin record four consecutive red closes. What followed was a single green fence that would turn out to give rise to an even more brutal downtrend. Now, if bitcoin were to mirror this 2014 move, then another dip below $30,000 could be imminent.
Not all bad news for bitcoin
While seven consecutive red fences can often paint a bearish picture, this is not always the case. It is well known that the digital asset can register the most bearish patterns just before the recovery. Often it is a huge recovery.
An example of this was in August 2018, when the market marked six consecutive red closes. Since the market was in a stretched bear market at the time, it was assumed that what would follow could only be more losses. However, this turned out not to be the case, as the digital asset subsequently recorded five consecutive green closes.
It wasn’t the start of the next bull market, but it did show that while these trends can signify further lows ahead, they can also be a harbinger of a good recovery. This time, expectations for bitcoin are high as the digital asset was able to break above $30,000, although it struggles to hold its position above that point.
BTC price is hovering around $29,600 as of this writing. This puts it slightly above its 5-day simple moving average, but continues to show bearish trends across other indicators.