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One More Crash Required Before Bitcoin Hits $20K: Analyst

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Bitcoin remains at risk of crashing below $10,000 even as its long-term fundamentals look incredibly bullish.

The benchmark cryptocurrency could fall into the $8,000-8,500 area, according to a trade setup presented by a TradingView-based analyst. It showed BTC/USD in a “breakout zone” above historically relevant trendline resistance, now approaching a sell-off area defined by the $12-000-14,000 range.

Bitcoin faces high selling pressure near $14K. Source: BTCUSD on TradingView.com

The $12,000-14,000 area comes with a historical significance as resistance. It, on more than eight occasions, has capped BTC/USD from extending its upside momentum. Bulls turn cautious around it, leading to a drop in new long positions. That, in turn, paves the way for bears to increase short entries.

The upper green bar in the chart above shows higher bearish sentiment around the area.

Bitcoin, therefore, could stretch its upside momentum up until $14,000. Nevertheless, its rally may follow a sharp correction to the downside. Should that happen, the TradingView.com analyst sees the price crashing towards the lower $8,000s.

And he offered more than one technical outlook to explain his bearish bias.

Bearish BAT Formation

The analyst referred to one of his recent outlooks on Bitcoin, reiterating the same bearish correction towards $8Ks but based on a different technical pattern: BAT.

It is a classic retracement and continuation structure that occurs when a trend tentatively reverses its direction and continues on its original course. With that said, BTC/USD could continue trading towards the $12-14K area but would remain at risk of correcting lower below $10,000.

bitcoin, btcusd, btcusdt, xbtusd, cryptocurrency

Bitcoin price outlook, as presented by Weslad. Source: BTCUSD on TradingView.com

“If you could recall my last analysis which proposed immediate test on 12k zone after discovering potential BAT formation on BTC. This view remains very valid and we can count on it and wait for a possible retracement after the BAT target is achieved.”

Bitcoin at $20K

The analyst further added that a pullback towards $8,000 would bring ideal opportunities for investors with a long-term market outlook.

His chart envisioned a sharp rebound towards $20,000 as Bitcoin hit $8,000.

The prediction fell in line with what other fundamental analysts say about the cryptocurrency: That it would grow higher in the coming quarters as more and more investors pick it as their safe-haven against the Federal Reserve’s dovish policies.

The US central bank has vowed to keep interest rates near zero until 2023. It has also committed to purchase unlimited corporate and US government bonds. The policy risks sending yields on the long-term Treasuries below zero, making it unattractive for investors to hold bonds altogether.

Meanwhile, continuous injection of US dollars into the economy robs the greenback of its appeal of a global safe-haven. The same narrative also intends to help push Bitcoin higher because of its underlying scarcity as an asset.



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Bitcoin

Bitcoin faces this final resistance zone before $20K all-time high

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Bitcoin (BTC) traders are pinpointing the order books of major exchanges that show the $19,500 level is a near-term resistance level.

Bitcoin rejects $19,500 for now

On Nov. 25, Bitcoin price was rejected at $19,500 with a relatively large volume across top spot exchanges. On Binance, for example, BTC price hit $19,484 before seeing a slight pullback to sub-$19,300.

BTC/USDT 4-hour chart (Binance). Source: TradingView.com

The minor rejection likely occurred because of the stacks of sell orders between $19,450 to $19,550.

A popular pseudonymous trader known as “Byzantine General” shared the order books of all major exchanges that showed $19,500 as a key area for sellers.

Vijay Boyapati, a Bitcoin researcher, similarly said that the $19,500 to $19,550 range remains as the last sell wall before a new all-time high.

If Bitcoin does not retest the $19,500 area again in the next several hours, this could mean that another drop is likely. Considering that it would be the last resistance until the new all-time high, traders expect some reaction from sellers.

Another small pullback would benefit Bitcoin because it would further neutralize the futures funding rate. The funding rate of BTC futures has increased once again to 0.07% on Binance Futures and other exchanges.

Considering that the average funding rate of Bitcoin is 0.01%, another short-term drop to reset the derivatives market may even strengthen the upward momentum.

Shorts being at levels unseen since April is a variable

However, a variable to consider is that the number of shorts in the Bitcoin market is at its highest since April 2020.