Bitcoin to Retest This Level Before Jumping Towards $12K, Says Analyst
Bitcoin stands stuck between equally adamant buyers and sellers in the past three weeks, with its price going nowhere as a result.
The benchmark cryptocurrency fell towards its monthly support near $11,120 on Wednesday after failing to break above $11,880. Moving forward, a full-fledged bull run seems unlikely as long as Bitcoin test key levels to the downside, says an analyst.
The pseudonymous daytrader noted Bitcoin in a consolidation cycle, stating that a breakdown towards $10,600/$10,700 level might bring back the buying interest in the market.
“For now, BTC looks like it wants to test SuperTrend support (and re-test the breakout),” he said. “So for me, I’m thinking $10,600/$10,700 range bounce. Then comes the fun after people flip bear.”
The analyst attached a chart to illustrate his upside targets. It showed that the Bitcoin price expects to make a sharp reversal towards $12,000 and levels above it.
Bitcoin expects to rebound sharply towards $12K following an old support-retest. Source: TradingView.com, IncomeSharks
A Fundamental Bounce
The cryptocurrency is on a corrective downside trend after topping near $12,500 earlier this August. Analysts continue to see the move as a short-term bearish trend, given the market’s core long-term trend, which points to higher valuations due to fears of rising inflation among traders and investors alike.
The biggest example is US Real Yields. The Treasury Inflation-Protected Securities (Tips), which provide investors protection against inflation, saw an increase in bids for its 10-year contract. The yield on the inflation-protected investment slipped towards minus 1 percent in recent days.
US 10-year Tips yield is below zero. Source: FRED
Analysts are also long-term bullish on Bitcoin because of its recently-developed negative correlation with the US dollar. The cryptocurrency rose higher by more than 200 percent from its March nadir just as the greenback fell to its 27-month low from its yearly top.
As a result, many firms and individual investors lately decided to allocate a substantial part of their cash reserves to Bitcoin.
Public-traded firm MicroStrategy purchased $250 million worth of cryptocurrency units as a hedge against a weaker US dollar. Even a Canada-based graphic firm, Snappa, converted its cash deposits into Bitcoin after earning lesser yields from their local banks.
Billionaire investor Paul Tudor Jones also allocated 1-3 percent of his $22 billion-portfolio to Bitcoin futures, calling the cryptocurrency the “fastest horse” against inflation.
Bitcoin OBV Bearish
The analyst who expected Bitcoin to bounce from $10,600-$10,700 range, meanwhile, stressed on the technical aspects. In a separate chart, he pointed out the cryptocurrency’s On Balance Volume, or OBV, which uses volume and price to measure buying pressure and selling pressure.
Bitcoin OBV hints at a higher selling pressure. Source: TradingView.com, IncomeShark
“OBV on the 4h is still showing we have more room to drop. Sellers are still selling more than buyers. We haven’t had a shift in pressure yet. Looking for a sharp V reversal. Most likely would happen lower in this “Buy Zone”.
Bitcoin was trading 1.03 percent lower at $11,346 at the time of this publication.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Yashu Gola, @Khareem Sudlow