Bitcoin trend strength shows striking similarities to the last Bull Market

Bitcoin price broke above $45,000 for the first time since April 2022, and according to the weekly average directional index, the rally may not stop anytime soon. This is because trend strength measurement tools are starting to show striking similarities to the 2021 Bull Market.

When Bitcoin is in trend, it's wise to steer away. This is true regardless of whether BTCUSD is in an rise or a downtrend. According to the Average Direction Index, the Crypto Assets with the highest Market Cap are currently in an rise trend. This tool is designed to measure the strength of a trend on any timeframe. When ADX grows and rises above 20, it indicates an active trend. Below 20, and there is not enough evidence of a trend, this could indicate a sideways price move.

Bitcoin's weekly ADX is not only above 20, but above 51. It reached more than 51 at the end of 2020, resulting in a 4-week rise of 120%. Fluctuation of the same magnitude, BTCUSD could reach $94,000 per coin by mid-February.

The Average Directional Index is a trend strength measurement tool designed by J. Welles Wilder, Jr., the creator of other technical analysis tools, such as the dark blue ADX reading above showing the strength of the trend. However, the ADX is equipped with two directional indicators: DI+ and DI-. Not only is ADX at the exact location of the Bull Market in late 2020, early 2021, but the green DI+ and the red DI- are also at the same level.

This may suggest that the conditions are just as ripe for a parabolic rebound. In 2021, Bitcoin peaked when ADX reached 85 and then began to retreat. If BTCUSD exceeds this level, we may see a stronger rebound than expected.

If it fails to reach above 85 but makes a new all-time high, a bearish divergence could warn that Crypto Assets is about to peak. Whatever the case may be, ADX could become an important tool for understanding Crypto Assets trends.

(Source: @tonythebullBTC)