After breaking through the $10,000 psychological level, Bitcoin is faced with a critical resistance that could decide its medium term future.
Until recently, the last time that BItcoin traded above the $10,000 price mark was in February 2020. Since then, Bitcoin has traded even to sub $5,500 levels, and despite expectation from bulls, it has struggled to recover fully until last Monday. This recovery has encouraged more optimism from Bitcoin fans and those that expect prices to go higher. However, available technical data suggests for everyone to pay closer attention to what happens next.
Bitcoin is Trading Below a Major Trendline
Since achieving an all time high of $20,089 in December 2017, Bitcoin appears to have been trading in a classical downtrend. The trendline from the said period proves to have been well respected ever since. The only time that this trendline was tested after Bitcoin’s all-time high price was in July 2019, when Bitcoin traded above $12,800. This led to a significant pullback from which Bitcoin price is still in the process of recovery.
Considering the strength of this trendline, and the period of time which it spans, it has achieved a reputation of a major pivot that traders and investors watch out for.
Presently, this trendline coincides with Bitcoin price at around $10,500. Although the recent surge saw Bitcoin overcome $10,000 and going as far as $10,429, an uptrend has not yet been confirmed. Price needs to decisively overcome the $10,500 or the long term trendline for the bulls to become fully in control.
Sometimes, analyses like what has been explained above is a bit complex for newbies in trading to understand.
What simply happens is that massive orders are usually placed around these pivot points by big volume traders. Therefore, when price approaches the pivot, let’s say in an upward movement, the market encounters huge selling pressure. This is what causes reversals or retracement in price.
Time to Pay Close Attention
Bearing this in mind, the coincident price point of the recent upward Bitcoin price movement attracts critical attention to the market. However, this time around, the bulls appear to be more optimistic of a major upward movement. This is supported by the global economic troubles of the aftermath of the fight against Covid-19.
One of the very vocal Bitcoin supporters, Galaxy Digital co-founder and CEO, Mike Novogratz believes that after conquering $10,000, Bitcoin price is bound to rise quickly. He tweeted recently:
$BTC is coiling. It will take out 10k soon. All the tragic turmoil in the USA adds to the narrative. Budgets are going one way and it’s the opposite of balanced. When 10k goes it will move fast. Get on the train.
— Mike Novogratz (@novogratz) June 1, 2020
Apart from Novogratz, other indices and data available point towards a more likely upward trend for Bitcoin. Details about this was made available in our previous article, and the upward pressure on Bitcoin price seems to be mounting.
Another popular trader who shares his opinions on twitter with the handle @DavtheWave has also acknowledged the $10,500 key area. “Dave the Wave” is popular for his point blank predictions and bull’s eye calls on the Bitcoin market.
Over the past year, he accurately predicted the retracement of Bitcoin from above $12,000 to $6,400. Earlier this year as well, he predicted that price would rally to around $11,000. Both times, he was proven right, which is making the community take him more seriously with his calls. This time, he opines that Bitcoin is approaching a critical pivot where a breakout would lead to a significant upward movement, while being resisted would lead to another retracement.
Trading in Bitcoin and cryptocurrency is a risky venture that requires skill and knowledge. If you must participate, ensure to carry out your own independent analysis and engage the markets in a manner that suits your goals and lifestyle.