Bitcoin remains at risk of crashing below $10,000 even as its long-term fundamentals look incredibly bullish.
The benchmark cryptocurrency could fall into the $8,000-8,500 area, according to a trade setup presented by a TradingView-based analyst. It showed BTC/USD in a “breakout zone” above historically relevant trendline resistance, now approaching a sell-off area defined by the $12-000-14,000 range.
The $12,000-14,000 area comes with a historical significance as resistance. It, on more than eight occasions, has capped BTC/USD from extending its upside momentum. Bulls turn cautious around it, leading to a drop in new long positions. That, in turn, paves the way for bears to increase short entries.
The upper green bar in the chart above shows higher bearish sentiment around the area.
Bitcoin, therefore, could stretch its upside momentum up until $14,000. Nevertheless, its rally may follow a sharp correction to the downside. Should that happen, the TradingView.com analyst sees the price crashing towards the lower $8,000s.
And he offered more than one technical outlook to explain his bearish bias.
Bearish BAT Formation
The analyst referred to one of his recent outlooks on Bitcoin, reiterating the same bearish correction towards $8Ks but based on a different technical pattern: BAT.
It is a classic retracement and continuation structure that occurs when a trend tentatively reverses its direction and continues on its original course. With that said, BTC/USD could continue trading towards the $12-14K area but would remain at risk of correcting lower below $10,000.
“If you could recall my last analysis which proposed immediate test on 12k zone after discovering potential BAT formation on BTC. This view remains very valid and we can count on it and wait for a possible retracement after the BAT target is achieved.”
Bitcoin at $20K
The analyst further added that a pullback towards $8,000 would bring ideal opportunities for investors with a long-term market outlook.
His chart envisioned a sharp rebound towards $20,000 as Bitcoin hit $8,000.
The prediction fell in line with what other fundamental analysts say about the cryptocurrency: That it would grow higher in the coming quarters as more and more investors pick it as their safe-haven against the Federal Reserve’s dovish policies.
The US central bank has vowed to keep interest rates near zero until 2023. It has also committed to purchase unlimited corporate and US government bonds. The policy risks sending yields on the long-term Treasuries below zero, making it unattractive for investors to hold bonds altogether.
Meanwhile, continuous injection of US dollars into the economy robs the greenback of its appeal of a global safe-haven. The same narrative also intends to help push Bitcoin higher because of its underlying scarcity as an asset.