Bitcoin price retracement is likely as on-chain trends and technical trends seem to have begun to favor bears
Bitcoin price has started to climb higher again after a consolidation spanning under $ 16,000. At press time, BTC is currently trading at 16,402, up nearly 5% in just the past 24 hours.
BTC/USD 4-hour chart | Source: TradingView
Bitcoin price breaks the critical support of $ 16,200
Analysts say that Bitcoin must decisively cross $ 16,200 to confirm its latest price higher. Looking back at Bitcoin’s price history, Bitcoin was rejected at that level on at least two separate occasions in late 2017. However, it’s clear this time; things were different. Bitcoin has surpassed that level and is showing a lot of momentum towards $ 17,000.
For Bitcoin to validate its ongoing rally, it will turn that level into support in the coming days.
Not everyone believes Bitcoin will go higher from here. Many people are uncertain about the future of the markets because although vaccines are available, there are still many short- to medium-term uncertainties.
Analyst Chase_NL said:
“As euphoria sweeps CT, the pandemic’s second wave is sweeping the world. Will Fed intervention keep everything afloat? Probably. But pandemic + weekly resistance = reduce the risk for me. As said, I sold off some spot #Bitcoin at $15750. Today, some $ETH at $472. Also, please do not interpret this as selling my bags. I still hold spot $BTC, still hold spot $ETH. All I’m doing is taking some profits during a solid rally. With a new pandemic wave right around the corner and no stimulus in sight, I want some dry powder in the case.”
There are also concerns that Bitcoin’s rally is overheating, largely because the majority of investors are now for profit. This can lead to profit-taking leading to an adjustment.
Analysts have begun to expect a retracement
Despite consistently closing above key support levels, there are expectations of lower pullback levels as certain on-chain trends and technical trends seem to be prioritized to drive Bitcoin down.
Many thought it would be really good for Bitcoin to correct here to reset this market’s expectations and minimize the amount of leveraged speculation that often takes place near the top.
The chart below shows a potential correction coming through Bitcoin’s price action, along with the rate of whales exchanging (24-hour moving average). The rate tries to describe the number of Bitcoin whale addresses sent in exchanges.
The chart shows that there has been an increase in the number of whales depositing BTC into exchanges, which could trigger a pullback.
Some analysts are looking at other technical trends like the bearish divergence that forms between Bitcoin’s one-day candlestick chart, along with the relative strength indicator. A bearish divergence is when an asset’s price action moves in opposition to the bearish momentum indicator, which shows that the bulls are losing the upper hand in the uptrend.
However, some expect this market to go one step further. Bitcoin has yet to see a top candle “go off” that analysts say they expect shortly.
You can see the Bitcoin price here.
Read more:
- Bitcoin Price Failed To Hold $16,000 Because A Higher Selling Pressure Above The Level Prompted It To Correct Lower Immediately
- Billionaire Investor Ray Dalio Had Warned About How Future Governments Will Deal With Bitcoin