Key Bitcoin Takeaways
- Bitcoin posts minor rebound after falling two days in a row.
- The upside retracement appears as the BTC/USD exchange rate tests its 200-4H simple moving average as support.
- Meanwhile, the pair’s move downhill comes as a part of a Rising Wedge breakout, risking further declines.
Bitcoin managed to bounce back after falling to $53,000 during the Asia-Pacific trading session on Tuesday.
The flagship cryptocurrency jumped 2.28 percent from the said intraday low, hitting $54,332. Nevertheless, its upside retracement lacked momentum, showing that market players anticipated the BTC/USD’s decline to further into the four-hour session.
The Relative Strength Indicator (RSI) reading hinted at slipping into its oversold region, hovering just around 30, a threshold that signals buying opportunities if breached to the downside. It seemed like a possible thing to happen since the bitcoin price just broke below a Rising Wedge, a bearish reversal pattern.
The Wedge breakout risks crashing BTC/USD to as low as $41,000 in the coming sessions. At the same time, another pattern — a Descending Triangle structure — also hints at an extended downside move for Bitcoin, especially as the cryptocurrency tests its lower trendline near $53,000 as support.
Therefore, the bitcoin price could either breakdown or continue to fluctuate inside the Triangle range. That would initially mean a rebound towards $58,000, only to pull back towards $53,000 or levels around it. The price could eventually break below the Triangle pattern after repeatedly testing the $53,000-support, falling to as low as $41,000.
Conversely, a clear break above the Descending Triangle structure would move Bitcoin back inside the Rising Wedge pattern. Upon reclaiming the Wedge’s lower trendline as support, the cryptocurrency could extend its uptrend to reclaim its record high of $61,778 or break above it altogether.
Bitcoin’s decline on Tuesday appeared in the wake of a rebounding US dollar. The demand for the greenback surged against an ongoing tussle between China and the US allies comprising the UK, Canada, and Europe. A crashing Turkish Lira also added to the dollar’s appeal among exposed investors.
On the same side were coronavirus anxieties between the European Union and the UK and virus fears in the region.
Bitcoin’s correction looked overdue after its yearlong parabolic rally since March 2020. The cryptocurrency continues to offer better profit-taking opportunities than any other traditional asset. With economies reopening amid an accelerating vaccination drive, traders could decide to reduce their bitcoin exposure to seek cash.
That does not make Bitcoin bearish yet. More investment firms have provided supportive opinions on the cryptocurrency as it gains entry into the balance sheets of leading Wall Street companies, including Tesla.
“Total bitcoin returns this year are already among the highest in its short history, and investors have noticed,” said Bank of America’s global commodity research team while warning that the cryptocurrency is not an ideal hedge against inflation due to its price volatility and extreme reliance for supply on a small collection of accounts, otherwise known as “whales.”
Goldman Sachs restarted its crypto trading desk in March. Meanwhile, Morgan Stanley announced that it would include three bitcoin-enabled bitcoin investment funds to its wealthy clients. Bank of New York Mellon and MasterCard also committed to launching crypto-enabled services in 2021.