Key Bitcoin Takeaways
- Traders brushed aside the Coinbase FOMO to crash Bitcoin and its rival digital assets this weekend.
- Dip-buying at local support levels helped to avoid a full-fledged bearish assault.
- Bitcoin faces the prospect of further breakdown while trading inside a Rising Wedge pattern.
Yerevan (CoinChapter.com) — It was not an ideal Spring weekend in the cryptocurrency sector.
Bitcoin plunged hard alongside other top-cap digital assets as traders decided to secure their profits as the market sprinted towards its all-time highs in the wake of Coinbase’s direct listing on Nasdaq last Tuesday. Meanwhile, reports of higher-than-anticipated inflation data kept speculators glued to Bitcoin, which projects itself as a messiah against rising consumer costs.
But the flagship cryptocurrency needed a shocking correction. It was having an overly bullish 2021, with the BTC/USD exchange rate rising by as much as 126.12 percent to $64,896.75 on a year-to-date timeframe. The pair eventually corrected by as much as 20.95 percent from the top level and marginally avoided a deeper retracement owing to key support levels.
For instance, bulls caught Bitcoin’s latest price dip at a confluence of two support levels: the 50-day moving average (the blue wave in the chart above) and an ascending trendline that constitutes a Rising Wedge pattern. Rising Wedges are bearish reversal patterns.
That said…
…Bitcoin continues to face a do-or-die situation at the latest support confluence. A breakdown below the ascending trendline tends to validate a Rising Wedge breakout scenario. The price can fall by as much as the maximum distance between the Wedge’s upper and lower trendline. That puts BTC/USD en route to $36,000.
Meanwhile, a rebound off the Rising Wedge support would have traders test the upper trendline as their intra-range upside target. A break above the Wedge resistance could invalidate the bearish reversal theory altogether, as the pattern would tend to turn into an Ascending Channel structure, instead.
Should such a retracement play out, the bitcoin price is looking to hit a new all-time high, much in line with traders’ expectation to reaching $100,000 by the end of this year. Fundamentals concerning higher inflation, lower interest rates until 2024, and rising institutional interest in bitcoin further keep the bullish hopes up.
This week, there is no major economic event, except that the European Central Bank would announce its Interest Rate Decision, alongside the release of its Monetary Policy Statement. A dovish policy would likely boost the demand for the US dollar that could strengthen a downside bias in the Bitcoin market.
Photo by Tim Mossholder on Unsplash
