Bitcoin Cools Off After an Impressive Rally
After a rapid and impressive upward price movement in the last few days, bitcoin seems to be cooling off. The cryptocurrency experienced a 25% gain, resulting in an increase of around $13,000. Now, the question arises – will bitcoin continue its upward trend or has it reached a local top at $64,000?
An Unprecedented Surge
On Wednesday, bitcoin witnessed an unprecedented surge in its price. The cryptocurrency’s value soared from $57,000 to just over $64,000 within a day, although it briefly fell to $58,000 due to a minor pullback.
Source: Coingecko/Trading View
When the Fibonacci tool is applied to the top and bottom of the recent sideways consolidation period, it is evident how perfectly bitcoin respected each level. On Monday, bitcoin broke out and hit the 1.618 level, followed by reaching the 2.618 level on Tuesday. Finally, on Wednesday, it surpassed the 3.618 level and went well above the 4.618 level.
This Bull Market Is Different
In a typical bull market, bitcoin would now likely move sideways or experience a slight downward trend. This could take the form of another consolidation phase or possibly a bull flag pattern.
However, the current bull market is far from normal. Many fail to understand this. The buying pressure from institutions and retail investors is rapidly depleting the available supply of bitcoin in the market.
Edward Snowden recently suggested that a national government may have been buying bitcoin, and this would not be surprising. If a government were to accumulate a substantial amount of bitcoin, it would gain a significant advantage over other governments. Once this information becomes public, it could trigger a worldwide frenzy of bitcoin adoption.
Breakout or Breakdown?
Source: Coingecko/Trading View
Speculating on the bitcoin price, it appears that bitcoin is still attempting to break out. However, the price has remained within the bounds of a triangle pattern. A breakdown might be the preferred outcome, but the current trend remains upward and unbroken. Therefore, it is advisable to stay alert as bitcoin may continue its rampage. The closing of this week will provide more data on bitcoin’s future direction. Trade cautiously.
Hot Take: Bitcoin Enters a Cooling Phase
Bitcoin’s recent surge has put the cryptocurrency in the spotlight yet again. However, after such a remarkable rally, it is only natural for bitcoin to cool off. The next few days will reveal whether bitcoin will resume its upward trajectory or if it has indeed reached a temporary peak. As the market adjusts and more data becomes available, it is crucial to trade with caution and stay informed of any significant developments. Despite the temporary cooldown, bitcoin’s future prospects remain promising, and it continues to be one of the most exciting assets in the financial world.
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