Bitcoin (BTC) has corrected below $26,000 after an unsuccessful attempt to breach $30,000, which is widely regarded as a critical resistance point to start a new bull run. Recent price movements have caused some analysts to consider the cryptocurrency’s uncertain future.
Notably, in a series of posts on TradingView on Sept. 3, a crypto analyst going by the alias Tolberti suggested that Bitcoin’s recent rise and fall in price could potentially be the “bull trap” of the year.
He pointed out that the current Bitcoin chart appears to be forming a clear head and shoulders pattern – an indicator typically associated with bearish trends.
Bitcoin price analysis chart. Source: TradingView
“Bitcoin is up a lot, but it’s definitely a bull trap so don’t fall for it! We can see that the chart is showing a huge head and shoulders pattern, which is a very bearish sign. This pattern has yet to be confirmed as the neckline holds, but the price is below the major blue trendline, increasing the likelihood of a collapse!” he said.
In his view, this trend shift from bullish to bearish presents an opportunity for traders to go short on Bitcoin. The analyst identified certain price levels that he believes could offer attractive entry points for traders.
“Where to take profits or buy bitcoin? I strongly recommend the 0.618 FIB ($20,377) retracement in the confluence with the unfilled CME gap. This is extremely strong support and we should see the start of a new bull market, or at least a significant rebound from it,” he added.
Bitcoin readiness for a bull run
However, the analyst warned that Bitcoin is not yet prepared for a full bull market and presented several key indicators that support his bearish stance. One notable indicator he highlighted is Bitcoin trading below the 200-week moving average (MA), which traditionally indicates ongoing bearish sentiment. Specifically, he hinted that the leading cryptocurrency could potentially crash to $10,000, with a possible reversal as early as March 2024.
In addition, he acknowledged that after a significant market crash, Bitcoin recently showed an impulse wave, which is usually taken as a bearish signal. Still, he posited that an upward correction could precede another significant downturn, adding further uncertainty to Bitcoin’s future price action.
It is important to note that Bitcoin has corrected to the more typical area around $26,000 after posting mid-week gains on positive regulatory news. Bitcoin saw a remarkable surge of almost 8%, topping $28,000 on Tuesday.
This increase followed a federal appeals court decision ordering the Securities and Exchange Commission (SEC) to reconsider its previous denial of Grayscale Investments’ application to convert its GBTC into an exchange-traded fund (ETF). In line with recent trends, the cryptocurrency quickly recouped a significant portion of those gains.
In fact, cryptocurrency enthusiasts argue that the approval of a bitcoin spot ETF could serve as a significant price catalyst for bitcoin. Notably, this product, which looks set to be the first of its kind in the US, is seen as a key driver of institutional capital inflows into the broader crypto market.
However, some market analysts warn that the hype surrounding an ETF listing should be dampened as it is not a guaranteed route to a bitcoin price recovery.
Bitcoin price analysis
At the time of writing, Bitcoin was trading at $25,903, up a modest 0.45% over the past 24 hours. On the weekly chart, bitcoin’s movements have been relatively small with a drop of around 0.61%.
Bitcoin seven day price chart. Source: Finbold
A review of Bitcoin’s technical analysis shows that bearish sentiment is currently dominating the cryptocurrency. A summary of TradingView’s one-day indicators shows a sell recommendation at 14, while moving averages at 13 suggest a ‘strong sell’. Oscillators, on the other hand, recommend a “neutral” stance at 8.
Technical Bitcoin Analysis. Source: TradingView
As Bitcoin continues to exhibit a stagnant growth pattern, market watchers are keeping a close eye on other potential catalysts, including the upcoming halving in 2024, macroeconomic factors, and regulatory developments.
Disclaimer: The content of this website should not be construed as investment advice. Investing is speculative. When you invest, your capital is at risk.
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