After a rough start to the year, investors are slowly gaining their optimism back about Bitcoin. Those who bought at 20K in December were down almost 70% when Bitcoin reached the ‘6K bottom’. Bitcoin has since tested the 12K level and looks to be approaching there again soon. The question most investors are asking is, is Bitcoin headed for 20K again?
While I agree that 6K was most probably the bottom of the new year correction, I think we have one last pullback before we see the next major rally.
Here’s my thoughts as to why:
(here’s a link for a better view: https://uk.tradingview.com/x/Heilstd0/)
As mentioned before, Bitcoin has tried to break the 12K barrier just a few weeks back but it was rejected at the 11.7K level and subsequently fell back down to the low 9,000 level. We are now approaching that same resistance level (purple line on the chart) and my feeling is that Bitcoin will ‘double top’ and fall down below 9K and to the low 8,000 level.
The second reason why I believe we have further falling before the next rally is that Bitcoin appears to be in a rising wedge (see chart) which is an indication of trend reversal in a bull run or a trend continuation in a bear run. If Bitcoin breaks the support line (bottom white line on the chart) then it should start falling.
The third and final reason why I believe Bitcoin may fall in the near future is that the 200-day moving average on the daily chart is around the 9K levels, indicating that Bitcoin is potentially overpriced and due a pullback to the average levels.
If institutional investors were to buy Bitcoin, they would look at indicators similar to this and they would drive down the price to buy at much lower levels. In order to buy billions of dollars worth of Bitcoin they need someone to sell it to them, if Bitcoin keeps on rallying, less people will sell and many will hold through the pump.
My conclusion is that I expect Bitcoin to drop based off of the technical indicators above HOWEVER I know that news drives this market massively and causes TA to become void at times. For example, if there’s suddenly news that Apple will accept payments in Bitcoin or something along these lines then Bitcoin will likely have a massive rally. However, no-one can predict news like this.
Remember this is not financial advice, just my opinion. I may very well be wrong, and if I am I will learn from it.
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