Bitcoin Price Forms Key Technical Pattern
An analysis of the Bitcoin (BTC) chart suggests that the price has formed a key short-term technical pattern known as a pennant. This pattern, characterized by the price being squeezed between higher lows and lower highs, often precedes a significant breakout to the upside or downside.
If BTC breaks below the pennant structure, it could quickly test the $40,000 level and potentially drop further to $38,000. On the other hand, if BTC breaks above the pennant, it could bounce back to the yearly highs near $45,000 and even push for a retest of the 2022 highs above $48,000.
Lack of Fresh Near-term Bullish Catalysts
The recent rally in BTC has been driven by anticipation of spot Bitcoin ETF approvals in the US and expectations of a Fed rate cutting cycle. However, some analysts argue that optimism about spot Bitcoin ETFs is already priced in and that fresh catalysts may be needed for further near-term upside.
Furthermore, there has been confusion in the Fed’s messaging regarding interest rate cuts, which could increase risks of profit-taking and contribute to a potential downside breakout in BTC’s pennant structure.
Cooling of Bullish Bets
Various indicators of market sentiment suggest a cooling in bullish bets on BTC. The 25% delta skew of Bitcoin options expiring in 60, 90, and 180 days has hit its lowest levels since October. This indicates waning optimism about the sustainability of the BTC rally.
In addition, the funding rate paid by Bitcoin futures traders opening leveraged positions has stabilized at lower levels, suggesting fading dominance of bulls. The outstanding value of leveraged futures positions has also continued to decline.
Bitcoin’s Long-term Bullish Case
While short-term risks may point to a correction, the long-term bullish case for Bitcoin remains strong. The potential approval of spot Bitcoin ETFs in the US and the upcoming Bitcoin issuance rate halving are expected to support the BTC price in the long run.
Despite short-term setbacks, Bitcoin’s historic market cycle suggests that it could reach new record highs in 2024/2025.
Hot Take: Volatility Ahead for Bitcoin
The formation of a key technical pattern on the BTC chart indicates that extreme volatility may be imminent. Depending on how the pattern is broken, BTC could experience a quick drop to $38,000 or a pump towards $48,000.
Factors such as a lack of fresh near-term bullish catalysts and cooling of bullish bets suggest that a downside breakout is possible. However, the long-term bullish case for Bitcoin remains strong, providing hope for aggressive buying by longer-term-minded investors during any potential dips.
Overall, while short-term price risks exist, Bitcoin’s historical market cycle and potential future developments indicate that it has the potential to reach new record highs in the coming years.
This article was originally published on Cryptonews.
By
By
By
By