Bitcoin chart is not looking as good as the price. Why are analysts worried that things could get worse?
The coin market seems to have recovered reasonably since the price of Bitcoin fell to $33,500 on January 24. Despite the recent bullish move which has seen the asset gain $9000 since then, many analysts are saying that it is still early to be excited. One actually said that BTC could still drop to 0 or head all the way to $600,000. Why are some investors still skeptical about the trend of the market?
The Black Cat Effect
With the expectations high in 2021 that the price of Bitcoin could soar up to $100,000 after it nudged towards $70,000. The value of the asset dropped 50% to $33,500, this has created the impression that the market may be going through a similar cycle. A case of a black cat passing us at night and another seems just like it.
What many investors are aware of is that the cycles that BTC has been going through has been beneficial to big investors who actually buy up large volumes of the cryptocurrency whenever the price drops to critically low levels.
There has been insinuations and indications that there is a massive manipulation that could be responsible for some of the massive dumps that bring the price down and the pump that sends it back up. This view was captured by Arthur Eaziolanki who stated that the coin market is largely manipulated because it is still an unregulated market.
What is obvious is that whales such as institutional investors are always on the lookout for opportunities to buy the coins when it drops close to the $30,000 support as they did when it dropped to around $3,500 in April 2019. That was after the price of Bitcoin rose to nearly $20,000 in 2017.
Cranking Data Granularity
The Bitcoin all-time chart, when zoomed on the 4H chart shows an interesting pattern. It is easy not to notice that the cryptocurrency could still turn bearish if one is looking at a too short period. This is why the recent upturn is still viewed with skepticism. A Twitter user @curiouspanda wrote:
“4/ Zoom right out and crank data granularity down to 4H and you see we’ve potentially not even got started. #bitcoin really could go zero or $600k ”
Despite the misgivings about the price of BTC, long-term holders of the digital currency are still in profit. This is especially so with those that have been holding it since 2017 when the price surged to $20,000 from just around $1000 from the beginning of that year.
Bitcoin is currently trading at $42,747, having broken the $38,900 resistance as envisaged. The next target is the $48,390 mark. This is going to be the next critical resistance where it could retract.
Bitcoin is in The Overbought Region
Bitcoin is in the overbought region, with the RSI indicator showing a value of 78. This has accentuated the misgivings of market analysts and may be an indication that a reversal is imminent. In this case, there may not be enough demand to push the price above the next critical resistance.
However, we should keep an eye on the possibility of a bounce in the RSI, in which case, the price of BTC would break the next resistance. Until that happens, the prospect isn’t really bright in the near-term.
