Trader outlines bearish scenario for Bitcoin price

On the market’s current situation, trader Илья Мещеряков explains.

Bitcoin managed to briefly set a new global high since January 2018 at $14,100, but a sharp pullback followed, and at the time of writing the cryptocurrency is trading around $13,400.

Starting with the technical picture — the failed attempt to break through the $13,860 resistance may signal a lack of short-term interest in moving beyond the current sideways range.

In earlier previews I wrote that in a downside scenario one should not expect a sharp crash, as large positions have been accumulated, from which they can be exited only in a prolonged flat.

The key support zone remains unchanged — only a break of $12,700-$12,800 could provide a strong downside impulse. In the coming days the price should test it again, but a true breakout is unlikely; this would more likely reflect the sidelining of buyers who rushed into purchases on the breakout of $14,000.

The external backdrop continues to deteriorate, as last week all markets closed in the red. The start of this week is mixed — oil prices continue to fall, stock indices in modest positive territory.

The trend of moving away from risk assets continues, with demand rising for safe-haven instruments. It is worth noting that this trend has been visible for several weeks, but Bitcoin looks noticeably better than the rest of the risk-asset market, which may be due to a time lag and ordinary speculation. Or perhaps there is no real correlation, and all this was merely coincidence.

The bearish scenario could push Bitcoin to $12,500 solely due to the triggering of stop orders below the current trend zone. The next target for this scenario is $12,000 as the previous resistance zone, which has not yet been tested.

Targets for the bullish scenario are hard to define since Bitcoin has already surpassed its global highs. One can only anchor to the psychological mark of $15,000.

Thus, the leading cryptocurrency is facing increasing difficulties in forming new price highs, after which steep pullbacks occur. Nevertheless Bitcoin remains above key support zones despite the negative external backdrop. My long-term outlook remains moderately bearish, though it should not be acted on until the zone of $12,700-$12,800 is breached.

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