An overnight settlement in the Bitcoin market on Monday brought its prices from an intraday high of $ 34,888 to $ 31,435.
The decline of approximately 10 percent occurred as traders’ anxieties increased with a JPMorgan report that cast doubt on Bitcoin’s potential to retest the $ 40,000. According to Nikolaos Panigirtzoglou, the main strategist at JPMorgan & Chase, one of the main catalysts behind the supersonic Bitcoin rally was the Grayscale Bitcoin Trust, which accumulated about $ 20 billion in BTC during its 1,000 percent price rally .
However, the past few weeks have seen a decline in the New York fund – of about 22 percent – that has exceeded Bitcoin’s downside correction of 17 percent.
Panigirtzoglou added that a drop in the wave of accumulation at Grayscale could hinder Bitcoin’s attempt to recover $ 40,000 or above levels, adding that “the balance of short-term risks is still tilted to the negative side.
A classic bearish reversal pattern has emerged on Bitcoin charts recently. The BTC / USD exchange rate has formed a sequence of repeated bullish rejection lows, while keeping your foot in a horizontal support area. The pattern appears as a descending triangle.
In retrospect, the formation of a descending triangle in an upward trend points to a reversal.
Most traders seek to open a short position after a high volume break in the lower trendline support. Usually, the target price is the top of the triangle. In the case of Bitcoin, it is more than $ 11,000 that puts the cryptocurrency at risk of falling to less than $ 20,000.
However, certain adjustments in the support trend line change the entire downward configuration, turning the Descending Triangle into a Flag in Taurus.
Apparently, Bitcoin simultaneously formed lower highs than it had been, forming a Symmetrical Triangle in an upward trend. In retrospect, it is a bullish continuation pattern that could cause traders to open long positions after a high volume break above the triangle’s resistance trend line.
Pennant’s head goal is as high as the mast formed before her (~ $ 20,000). This puts Bitcoin on the way to at least $ 50,000, should the upward bias continue.
The fundamentals that can trigger the Bitcoin Bull Pennant include the coronavirus stimulation the Federal Reserve’s pro-inflation policies and a bearish outlook for the US dollar. This has led many companies and investors to seek hedge in Bitcoin due to its similarities to gold.
“We are talking about Bitcoin over the next three, five, ten years slowly advancing in gold market capitalization,” said Vijay Ayyar, head of Asia-Pacific with cryptocurrency company Luno in Singapore, to Bloomberg on Tuesday. “If that happens, you will have a lot more than $ 50,000.”