Following a fall of 11%, or just over $11,000, the Bitcoin (BTC) price has bounced strongly from a trendline that stretches all the way back to April of 2021. Bitcoin has held the line. What’s next for the king of cryptocurrencies?
Market in prime bearish mode
With the news that around $6.5 billion in BTC was potentially about to hit the market from the Silk Road affair, investors and traders decided to push the sell button and a sharp cascade of selling took the BTC price all the way down to $91,300.
This news was released into a market that was already in prime bearish mode due to expected positive job figures that will be announced later on Friday. The reason that the market sees this positive as a negative is because there is now less reason for rate cuts, and therefore potentially less fuel for risk assets.
The Fear and Greed Index is a great indicator for market sentiment, and the Neutral 50 reading it is currently displaying shows just how far sentiment has worsened since Thursday’s Greed at a reading of 69.
Ascending trendline holds beautifully
Source: TradingView
The 4-hour chart for $BTC shows that the ascending trendline held beautifully as support for the latest price dip. The price is at resistance now, but bulls will be looking to break this and go higher, given that the current bounceback is still in its early stage.
Regarding the bottom of the chart, the Relative Strength Indicator (RSI) provides quite a reliable signal on the 4-hour time frame. Any time the indicator line gets to the 30.00 oversold level or below it, there is usually a bounce to follow.
Will the price continue to go sideways? This is quite probable, at least until 20 January, when Donald Trump becomes the new president of the United States. Of course, this could also be a sell-the-news event, but from this point on there should be many tailwinds building behind the price of Bitcoin, and with the rest of the year to go to fulfill the customary period of the 3-year bull market, 2025 could be explosive.
The view on the weekly chart
Source: TradingView
The weekly chart for $BTC shows the trendline which is acting as the star of the show so far. A lot of weekly candle wicks down to this line are being rejected, so the bulls will want to see this continue.
At the bottom of the chart, the Stochastic RSI is shaping to perhaps start turning back around. A bounce from the 50.00 level is a possibility. Even if the indicator lines do continue down to the bottom, it could take them from four to six weeks to get there. Once the blue line crosses back over the red line, and they are both above the 20 level, big upside price momentum can follow.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
