The chief analyst at RoboForex, Dmitry Gurkovsky, discusses the possible further scenarios for Bitcoin’s price movement.
BTC/USD could not rebound from the lower boundary of the ‘Triangle’ pattern and slipped lower. A break of the pattern’s lower boundary occurred followed by a test, and the asset is now trading near $31,000. If one extends the height of the pattern from the breakout point, the target for the decline could be $22,000. Therefore, if the price sustains below the key $30,000 level, further downside within the pattern’s play-out cannot be ruled out.
On the daily chart, the RSI indicator has again touched the support line, which may indicate a high likelihood of a rebound higher from current levels and the continuation of the uptrend. An additional signal in favor of this scenario would be a rebound from the lower boundary of the ascending channel.
Despite such a substantial drop in the asset’s price, Michael Saylor, at the moment the price tested the $30,000 level, again tweeted that MicroStrategy bought another 314 BTC at an average price of $31,808, for a total of $10 million. The last time he wrote about a large purchase was December 21, 2020, when the price briefly corrected and then moved higher again. But that time it was about a sum of $650 million. In doing so, Taylor hints that one should buy not at the peak, but during major price declines.
Another indicator of a potential bottom is the growing number of addresses holding more than 1,000 bitcoins. A new record has been set—2,446 addresses. In the last 20 days, this rose by 140, which may indicate that large investors are readying to push BTC higher in the near term. Taken together, all this supports the theory of a shift of assets from smaller players in the crypto market to wealthier bitcoin holders who are simply accumulating coins rather than selling.
Meanwhile, interest in digital currencies is rising among the U.S. government. Janet Yellen, who has just become the Treasury secretary in the Biden administration, said she is concerned about the illicit use of cryptocurrencies. She noted that such assets provide a way to bypass the current financial system and undermine America’s interests. However, Saylor is confident that new rules governing digital-currency regulation will ultimately be positive for Bitcoin’s growth. That approach will accelerate the attraction of institutional money to the market.
On the 4-hour chart, the RSI indicator has for the first time since the correction from $42,000 breached the downward trendline. This could signal its completion and the resumption of the price ascent. In that case, the immediate upside target would be $34,500.
As an alternative, the current price action could be viewed as a reversal pattern “Wedge” with the lower boundary tested at $28,000. A breakout of the upper boundary of the pattern with prices sustaining above $32,500 would indicate potential for a rise toward $42,000 and higher as the pattern plays out.
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