Bitcoin Faces Price Drop amid Rising Wedge Pattern and Market Uncertainties
Summary:
Bitcoin's price has dropped by approximately 3.7% within the past week to around $61,650, marking a 16.5% decline from its record high in March. The dip is associated with a subdued response to the introduction of Bitcoin and Ethereum spot ETFs in Hong Kong, US Federal Reserve's high interest rate policy, and decreased interest in Bitcoin spot ETFs in the US. Notably, Bitcoin's value may fall further or present buying opportunities due to a falling wedge pattern. Veteran trader, Peter Brandt foresees a drop into the higher $40,000 range, while technical analysis also indicates potential for more significant price declines.
As of May 9, Bitcoin has experienced a dip of about 3.7% in its price within a week, with its current value at around $61,650. This represents a drop of approximately 16.5% from its record high of $73,835 achieved on March 14. The slump follows a lukewarm reception to newly introduced Bitcoin and Ethereum spot ETFs in Hong Kong, a prolonged period of high interest rates by the US Federal Reserve, and dwindling interest in Bitcoin spot ETFs stateside. The question that remains: how much lower might Bitcoin's value fall in the current adjustment phase?
A trend known as rising wedge consolidation could put Bitcoin's value at $54K. This correction in Bitcoin's price is indicated by a falling wedge defined by two downward trending lines meeting at a predicted point of around $54,000. If the current falling wedge trend continues, Bitcoin's valuation could dip to this level by June.
The intersection point of the wedge pattern is conveniently close to Bitcoin's 200-day exponential moving average (200-day EMA), creating a double layer of support, giving impetus for price rebounds. The reversal trajectory of falling wedges often sees the price climb to the difference between the wedge's top and bottom trendlines.
Applying this formula to Bitcoin's daily chart could put its target at approximately $63,880, a rise of around 3.5% from current rates. Consequently, any further downward movement in Bitcoin's market value could present dips as buying opportunities.
However, seasoned trader Peter Brandt predicts Bitcoin might see a slump into the high $40,000 range. This is based on the descending triangle pattern evident after Bitcoin's inability to reclaim its previous high mark of $69,000. Brandt's pessimistic outlook on Bitcoin presents a classic descending triangle reversal scenario, where the price could pierce the lower trendline of the triangle, and decline by an equivalent distance of the triangle's maximum height.
Should this pattern be confirmed, there's an increased likelihood of Bitcoin slipping to around $48,550, a descent of over 20% from its present value, aligning with Brandt's high $40,000s prediction. From a technical viewpoint, the ongoing price adjustment for Bitcoin corresponds with a fall in the weekly relative strength index (RSI) from its previously oversold territory, a trend similar to what occurred ahead of the steep price correction in 2021.
Looking back, the Bitcoin price dropped to its 50-week EMA, raising the possibility of a repeat performance in 2024. That suggests a downside aim for Bitcoin of about $46,110 by June, a level corresponding with its 0.618 Fibonacci retracement line.
A significant break below the 50-week EMA could potentially see Bitcoin's price spiral towards the 200-week EMA at around $32,410, which is a substantial reduction of nearly 58% from its current market value. It's important to note, these views and opinions popularised here are solely the authors' and might not be an exact reflection of Cointelegraph's stance.
Published At
5/9/2024 11:12:05 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.