After a strong uptrend that brought Bitcoin from $6,800 to $8,450 in a matter of a few days, the cryptocurrency market has started to take a massive breather. Since peaking at the key $8,400 resistance just the other day, the price of BTC has plunged by 8%, tumbling to $7,800 as of the time of writing this article.
While some say it is too earlier to tell that this is a full-fledged reversal, analysts are wary that this pullback is a precursor to a drop into the $6,000 range, which would likely perpetuate the bear market Bitcoin has found itself in over the past six-odd months.
Bitcoin Poised to Fall Towards $6,000s, Analysts Assert
CryptoHamster noted that the price action seen after Bitcoin tapped $8,400 has been rather negative.
Firstly, the local volume peak marked the top, seemingly implying that it was a so-called blow-off top, which is a chart formation most often followed by deep retracements. Secondly, the TD Sequential is about to print a sell nine candle, implying a strong bearish reversal in the coming days that will only amplify what has already been seen. And lastly, the ADX and Fisher Transform — two directional technical indicators — suggest that bears are taking control after the short rally by bulls.
That drop below 23.6% Fibo looks bad.
– widening formation (uncertainty)
– the volume peak was at the top
– TD sequential green "8" (if next is "9" – a sign of a drop)
– ADX is below 25 (the rising trend is weak)
– a Fisher Transform bearish crossover$BTC $BTCUSD #bitcoin pic.twitter.com/lrIdCCvWgv
As to where BTC could end up in this retracement, analysts have looked to the $6,000s, unfortunately enough.
Cryptocurrency trader HornHairs noted that if BTC manages to close the weekly candle on Sunday under $7,870, he will expect a strong move down to the $6,000 flat (a region of key, key macro support), noting that the recent price action is rather indicative of a clear bull trap.
We got the breakout, which was a good start, but as the weekly chart stands, it looks like a bull trap.
If we close below $7870 on Sunday, my expectations will be a move down to $6k. Very important next few days. Nothing conclusive until Sunday. pic.twitter.com/9V4Gia3b4n
Do Bulls Have Any Hope?
With this confluence of bearish analyses, the question remains — do bulls have any hope?
According to Financial Survivalism, a pseudonymous analyst that last week called Bitcoin’s surge into the $8,000s when the asset was trading in the high-$6,000s, for sure.
In a recent TradingView post, the analyst asserted that he still expects for BTC to hit $20,000 by July 1st of this year, despite the drop that has been seen. He specifically looked to the following technical readings:
- The Lucid Stop and Reversal has printed a bullish candle for the first time since July 2019, when BTC was trading well above $10,000.
- The Average Directional Index on a daily basis has seen the first bullish crossover since March 2019.
- The one-week Relative Strength Index for Bitcoin is “getting ready to test 50,” a level that if broken through may imply dramatic upside.
- The one-day Ichimoku Cloud has formed a bullish TK cross.
Also, the fundamentals for Bitcoin and the broader cryptocurrency space remain decisively positive. Just the other day, January 6th, the hash rate of the Bitcoin network — a measure of the computational power being allocated to processing BTC transactions — hit a fresh all-time high above 120 exahashes per second, signaling that miners are continuing to allocate vast amounts of capital towards this space.
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