Bitcoin May Soon See “Strong Correction”
After 72 hours of upward price pressure, Bitcoin (BTC) has begun to slow at last. As of the time of writing, BTC is trading at $5,720, down from the $5,850 seen on some points on Friday and Saturday. While there isn’t clear selling pressure per se, some analysts are convinced that there is likely to be a stronger correction in the coming days.
In a recent tweet, Peter Brandt, a legendary commodities trader that expects a long-term Bitcoin parabolic run-up, noted that seeing that BTC has reached a price target at a key resistance ($5,750 region), he would expect that the cryptocurrency market is topping here. He notes that there is likely to be a “more significant correction” after a move to $6,500, which is where BTC traded at for a number of weeks and months during 2018.
DonAlt, a popular commentator and trader, also expects a pullback. He remarks that $6,000 remains a key resistance, and as such, he would be inclined to “look for swing longs around $4,300 to $4,700,” hinting that he expects for digital assets to see a healthy drawdown.
This comes just a day after statistical crypto analyst, Awe & Wonder, remarked that if historical precedent is followed, BTC will pull back and remain under its
logarithmic regression trend line, which sits around 40% higher than the current value of BTC. In another tweet, he notes that Bitcoin’s exponential trend model, similar to the logarithmic regression, is currently showing that there is “downside risk to still be considered,” as, in previous cycles, BTC fell even more dramatically underperformed the aforementioned model. And lastly, he notes that price-based metrics are “signaling caution.”
Maybe BTC Could Still Shoot Higher
While technical analysis seems to be hinting that a short-term drawdown sure is possible, Murad Mahmudov, a founding partner at up-and-coming crypto fund Adaptive Capital, recently broke down his reasoning as to why BTC holding above the $5,500 region could be “quite bullish.”
In a 22-part Twitter thread posted Saturday, Mahmudov, who has risen to prominence to become one of the most well-respected voices in the cryptocurrency ecosystem, drew attention to 20 reasons why Bitcoin is currently bullish. We’ll break down some of the important points.
Firstly, Bitcoin is currently trading in the midst of an ascending channel, marked by consistent higher lowers and higher highs. With BTC continuing to hold this pattern with an impeccability, a move higher to potentially break out of the upper bound of the channel seems likely.
Next, the Stochastic Relative Strength Index (RSI) and the traditional RSI are both showing bullish signs, both accentuating that the crypto market isn’t overextended and thus has room to run.
Thirdly, BTC is currently trading above key moving averages, like the 50-week simple moving average and 89-week exponential moving average, which “caught multiple local bottom and top areas in both previous and current cycles.”
And lastly, as hinted at in previous reports, there has been an unprecedented rally in the amount of BTC upon in short contracts, resulting in postulation, from Mahmudov and others, that a massive short squeeze may soon be inbound.
All this contributes to the idea that a strong correction, as Brandt expects, may not be entirely in the cards, and that a move past $6,000 and beyond could very well be on the horizon for Bitcoin.
Title Image Courtesy of Aleksi Raisa Via Unsplash