Bitcoin recently crossed above $40,000 again after weeks of trending below $35,000. However, it failed again in its upward trajectory. Bitcoin is now below $39,000, but still above the $34,000 support level as said in a previous post.
Analysts nevertheless expect a fresh upward move to $50,000 after this level was breached. If this does not happen, Bitcoin could lose its grip and slide back down to much lower levels which would be another entry opportunity for those who missed the first Bitcoin rally.
According to the Founder and chief market strategist at NormanTrader in a recent market analysis, Bitcoin must reach “sustained new highs” in February if it will continue to move upwards. If this fails, Sven says Bitcoin could experience another bearish movement that resembles that of 2018 which made the asset lose at least 70% of its value. This time, the price may go as low as $6400, he said.
$45220 is key for Bitcoin
For Bitcoin to maintain its newfound gains, Sven says the price must consistently go up in the next few days and weeks, the most important of these levels is $45220. This is because the price is one level that if sustained could diffuse the disturbing similarity between the current market structure and that of the deadly 2018.
Following the 2017 Bull market that took Bitcoin’s price to the biggest all-time at the time, there was a crack in the market structure that caused the number one cryptocurrency to crash from roughly $20,000 to $4000. The analysis suggests that the current market structure clearly resembles that of 2017/2018 and only a sustained upward move could help Bitcoin escape a similar fate to that of 2018.
If this fails, the 2017 all-time high could be the next logical target, failure to hold which will cause a dip to the $6000 area. This is important because as Bitcoin bounces back and approaches the previous high of about $41,500, a critical decision is about to be made which could be
“New highs that sustain, new highs that fail, a double top or a lower high with deep reaching corrective consequences, or a pause that refreshes before further new highs are made down the road,” Sven says.
Bullish Case Remains Intact…For Now
Although there is a need for caution especially by traders, as Bitcoin approaches the January 8 high, Sven says that the bullish case is still intact and so there is no cause for alarm at the moment. This is in spite of the fact that there is momentum building for a negative divergence. The negative divergence suggests that the upward momentum is slowing down and its appearance could be a red flag suggesting a possible bearish reversal.
Caution and a careful watch on Bitcoin in the coming days and weeks is therefore advised as Bitcoin tries to break the January 8 price again. At the moment, the price stands at $38,393 since it dropped after breaching $40,000 yesterday. It will be interesting to see what happens in the coming days, weeks and even months as Bitcoin’s future continues to play out.