Bitcoin Breaks Out of Bull Pennant
After more than two weeks within its bull pennant, the bitcoin price finally broke out on Wednesday, hitting the 0.382 Fibonacci resistance level. This resistance level is significant as it is taken from the $69,000 top down to the $15,500 low. However, bitcoin’s current price of around $34,400 is now below the top of the bull pennant, which poses a risk of a fake breakout. Nevertheless, there is a major trend line that should provide strong support just below.
Possible Retracement Levels
Looking ahead, it is possible for bitcoin to retrace back to the $30,000 level. Historically, all bitcoin bull markets have experienced 20% to 30% pullbacks. A return to $30,000 would only signify a 16.5% retracement, while a deeper plunge to $25,000 would represent a 30% retracement.
Momentum Favors Bitcoin
Despite the potential for a retracement, momentum seems to be on bitcoin’s side. After the Federal Reserve FOMC meeting and the announcement that rates would remain unchanged, it appears increasingly likely that rate cuts will occur in the future. This environment would be favorable for bitcoin. Additionally, more investors from traditional finance are recognizing bitcoin’s appeal as a hedge against global economic uncertainty.
Potential Upside
While considering the downside risks, it is also important to acknowledge the potential upside for bitcoin. If there is a break of the 0.382 Fibonacci resistance level, the price may rise towards the golden area of the 0.618 Fibonacci at $48,000. At this price level, it will be difficult for those unaware or skeptical of bitcoin to ignore its significance as a monetary phenomenon.
Hot Take: Bitcoin’s Future Hangs in the Balance
The breakout from the bull pennant and the resistance at $36,000 indicate that bitcoin is currently at a critical juncture. While there is potential for a retracement, momentum and market conditions suggest that bitcoin may continue its upward trajectory. The next major resistance level at $48,000 could be a turning point for wider adoption and recognition of bitcoin’s power. As investors navigate through uncertain times, bitcoin remains an enticing option for diversifying wealth outside of the traditional financial system.
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