A surprise sell-off in the Bitcoin market on Sunday that crashed the price to $17,610 met with an equally strong buying wall. The cryptocurrency recover later, jumping above $18,500, a level it held as support before the weekend plunge.
But to Marc Principato, Bitcoin really has not brushed aside its bearish risks. The Green Bridge Investing’s Executive Director contemplated the possibilities of more downside correction attempts as short term participants continue to watch $18,500 as a point of infection in the running uptrend.
“Today’s move from the 18,770 high to the 17,600 low demonstrates how FAST selling activity can assert itself,” Mr. Principato wrote in a late-night Sunday note. “Even if today’s candle establishes a bullish pin bar, the risk at these levels for a SWING TRADE is still unreasonably high.”
Bitcoin to $14K
The “bullish pin bar” pointed to a long downside wick that Bitcoin formed amid its sell-off
on Sunday. It represented bulls’ rejection to volatile downside attempts — a validation that buyers are guarding the $17,500-area against aggressive bearish assaults.
But Mr. Principato refrained from suggesting accumulation in the range between $17,000-$18,500. The analyst said he is waiting for Bitcoin to undergo another bearish correction, but to below the $17,000-support. A “proportional support,” he added, is at either $16,000 or in the upper range of $14,000.
Nevertheless, traders should wait for a bullish confirmation even if Bitcoin hits the $14,000-16,000 range, Mr. Principato warned, adding that the area only allows analysts to measure risks for their future trading strategies.
Bitcoin rallied relentlessly for six weeks in a row, rising by almost 78 percent as traders assessed the growing institutional investments into the cryptocurrency space.
Pantera Capital, an asset management firm in California, claimed that payment service giants PayPal and CashApp bought more than 100 percent of the current Bitcoin mining supply, leading to a supply deficit in both retail and institutional markets.
On the other hand, top strategists from ARK Invests, JPMorgan, and Blackrock made a bullish case for the cryptocurrency, citing its anti-inflation features against the oversupplied US dollar, as well as its ability to beat gold in the long-term to become the go-to hedging asset in times of crisis.
“[Bitcoin] is so much for functional than passing a bar of gold around,” BlackRock’s chief investment officer of fixed income Rick Rieder told CNBC on Friday last week.
The strong institutional backing for Bitcoin somewhat offset its technical risks. It enabled more traders/investors to hold the cryptocurrency than to sell it at its local highs, according to numerous sources that showed an increase in the so-called HODLING sentiment and a jump in the Bitcoin withdrawals from top exchanges.
Source: Bitcoin Analyst Foresees Bearish Correction as Price Struggles Near .5K