Yerevan (CoinChapter.com) — Bitcoin (BTC) stayed on its upward course throughout the Thursday session, rising by more than 2.75 percent into the post-lunch New York hours, even as mainstream investors’ focus shifted towards the other retail favorite, AMC Entertainment (NYSE:AMC).
The benchmark cryptocurrency climbed to an intraday high of $39,489 before turning lower on profit-taking sentiment that lurks around the $40,000-level. Traders still appeared too cautious to break above the said resistance level, forcing fears into the market that the Bitcoin’s price bounce from $30,000 might be a “dead cat bounce” — a fake upside breakout.
Because, in totality, Bitcoin is correcting lower after rising by more than 120 percent to almost $65,000. As of May 19, the cryptocurrency had crashed to as low as $30,000. The level prompted bulls to “buy the dip.” Hence, the price shot upward, making analysts believe the buying momentum could continue towards $40,000 and beyond.
“Bitcoin prediction working out so far. We are getting the triangle breakout. Eyes on $42,000 to $44,000 next.”— said IncomeSharks, an independent market analyst, based on an impending Triangle breakout scenario.
But Bitcoin has rejected the $40,000-resistance multiple times. Meanwhile, it shows a similar conviction of maintaining its bullish bias above $30,000. That has left BTC/USD in a $10,000-wide trading range, ideal for traders who want to profit from its intraday price volatility.
Even IncomeShark’s bullish outlook hints at exhaustion after testing the falling trendline near the $42,000 level. Therefore, fears of extreme downside corrections continue to lurk around the Bitcoin markets. Its a short-term bullish medium-term bearish scenario.
Bitcoin to $16,200?
Income Generator, a regular contributor at financial news portal Seeking Alpha, sees a dead cat bounce in the recent relief rally in the Bitcoin markets. The analyst noted that Bitcoin’s decline was as much as $35,000, but it recovered only about $10,383. It means that the cryptocurrency’s latest rebound risks exhaustion one way or another.
“Overall, our momentum strategies suggest that a downside break of the $30,000 level would confirm the validity of our bearish analysis, and we think that a breakthrough [in] this area might eventually unleash a wave of selling pressure that could send BTC-USD valuations back to the November 2020 lows near $16,200.”— Income Generator added.
The market now remains open to Bitcoin traders with a short-term risk appetite. A break towards $40,000 appears like the easiest way to make a few bucks. A long position anywhere beyond $40K carries major downside risks, especially as investors look at growth stocks alternatives that would benefit the most as the global economies reopen.
“40k is where my eyes are at today,” said analyst Rafaela Rigo.
Verdict: Wait for a clear breakout before opening any leveraged Bitcoin bets. Place stop losses against the direction of your trades.
Disclaimer: The article is not a financial advise. This is an opinion of the author.