Bitcoin has been on a parabolic bullish rally for quite a while, which was followed by sideways movement of the price. However, at press time, the pattern formed indicated an imminent correction.
At press time, Bitcoin was priced just below $8,000, i.e., $7,979 and had a market cap of $141 billion. The dominance of Bitcoin had reduced as the rally ceased and stood at 57%.
Descending Triangle Pattern
As seen in the chart above, Bitcoin’s prices are enclosed in a continuation pattern, i.e., a descending triangle, which is a bearish pattern for Bitcoin. The volume for the same can also be seen decreasing over the course of the pattern, which affirms the above pattern.
When the pattern unfolds, the price will break out of the pattern and head downward; the only thing stopping the price from dipping is important resistance points. The price is likely to hit $7,820 level after the breakout, however, if the former level fails there are subsequent resistance points at $7,674, $7,529, and $7,256, which will be tested in that particular order.
A possible Double Top in the formation?
The above breakout is a short-term movement of price, however, on a longer time frame, the price is stuck in limbo, which explains the sideways movement. The parabolic rally was quick which is why most prominent traders, including Peter Brandt, Tone Vays, and others, are expecting a correction, that is overdue.
In the above chart, the way the price of BTC is moving suggests the possibility of the formation of a double top. However, the pattern is only confirmed after the price breaks the lowest resistance, i.e., $7,529. After which, the price will decline quickly into a correction that is being expected by most of the traders in the crypto space.
There is however a scenario where the price might just take off from here since it’s is undergoing a sideways movement, which can also be treated as an accumulation phase.
Crypto Twitter is quite bullish on Bitcoin and expects it to continue the rally, however, technical analysts and traders are awaiting a correction. According to Tone Vays, the price of Bitcoin will reach $4,500 before proceeding to a bull rally; Peter Brandt is also awaiting a pullback. No matter the outcome, it is better to tread carefully or stick to stacking sats.
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Bitcoin will likely be valued at $100,000 with a market cap of over $2 trillion before the end of 2021
The entire cryptocurrency market seems to be on the brighter side of the market since the beginning of the year. A majority of the coins have recorded significant recoveries from their 2018 slump, a period during which most coins lost over 90 percent of their value, when compared to their all-time highs. Among all the coins in the market, Bitcoin [BTC] aka the digital gold, was noted to be making a massive comeback as the coin breached the $11,000 mark after nearly 15 months. The coin however, soon retracted to settle below the $11,000 level.
According to CoinMarketCap, at press time, Bitcoin was trading at $10,887.27 with a market cap of $93.549 billion. The coin recorded a 24-hour trading volume of $20.757 billion for the past 24 hours and saw a massive rise of over 17 percent over the past seven days.
Anthony Pompliano, Co-founder of Morgan Creek Digital Assets, predicted that the largest digital currency could rise to reach $100,000, before the end of 2021. Pomp added that he was around 70-75 percent confident in this prediction. He stated,
“As I have previously said, making predictions is difficult […] Part of my process as a professional money manager is forming a thesis (price target), identifying a timeline (date), and establishing a confidence level. And then constantly re-evaluating those three aspects of my thought process as I receive new information.”
Pomp however, listed six pointers that have to be understood beforehand. First, this prediction is not an investment advice, and people should do their own research before investing in the digital currency. The second is with respect to Bitcoin’s volatility, with Pomp remarking that since it was a highly volatile market, the coin could witness a significant fall before being valued at $100,000. He stated,
“I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value. These mini-boom/bust cycles should not cause panic, but rather need to be understood as natural market dynamics whenever an asset gains significant value in short periods of time.”
Further, the partner of the investment firm stated that the rise would be driven by several catalysts. This includes institutional adoption, exchange-traded funds and retail product approvals, global instability, governments all across the globe manipulating currencies, markets and economy. He went on to state,
“The market cap of Bitcoin will reach $2+ trillion when Bitcoin is worth $100,000. This is less than 1/3 the market cap of gold and less than 1/40 the global money supply.”
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