The Potential for a Bitcoin Rally
The co-founders of crypto analytics firm Glassnode, Jan Happel and Yann Allemann, believe that Bitcoin (BTC) may be on the verge of a major rally. They suggest that the cryptocurrency is exhibiting a classic bullish pattern that could lead to a significant breakout. According to Happel and Allemann, if BTC has just bottomed out in a descending wedge with a throw-over, it could rally to around $42,000 before undergoing a retest at approximately $40,500. From there, it could surge to much higher levels. The overall outlook remains positive.
The Descending Wedge Pattern and Elliott Wave Theory
A descending wedge pattern is used in technical analysis to identify potential bullish reversals in an asset’s price. This pattern is characterized by lower highs and lower lows that form a wedge shape on the chart. As the pattern progresses, the distance between the highs and lows decreases, indicating weakened selling pressure. A breakout above the upper trend line of the wedge is traditionally seen as a bullish sign. Additionally, Happel and Allemann apply the Elliott Wave theory, which suggests that price impulses occur in five waves after three-wave “ABC” corrections.
Bullish Divergence and Relative Strength Index
The Glassnode co-founders also note that Bitcoin is exhibiting bullish divergence with the Relative Strength Index (RSI), a widely-used momentum indicator. This divergence indicates that expectations of a downward break may be misguided. Instead, they suggest that a bullish reversal is underway after a five-wave downtrend.
Current Bitcoin Price
At the time of writing, Bitcoin is trading at $40,073, representing a 2% increase over the past 24 hours.
Hot Take: Glassnode Founders Predict Bitcoin Rally Based on Technical Analysis
The co-founders of Glassnode, a crypto analytics firm, believe that Bitcoin is displaying signs of a potential rally. They point to a descending wedge pattern and bullish divergence with the RSI as indications of an upcoming breakout. By analyzing chart patterns and applying Elliott Wave theory, they predict that Bitcoin could reach much higher levels in the future. The current price of Bitcoin stands at $40,073, with a 2% increase in the last 24 hours.
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