Bitcoin failed to shoot above $ 50,000 on Sunday, despite growing bullish sentiment on said upside target. Instead, the benchmark cryptocurrency warned of a potential bearish reversal after creating what charting gurus call the „rising wedge“.
The BTC / USD exchange rate has been moving up in the past few days, leaving a trail of higher highs and higher lows. Its movement formed two upward trend lines that converge on a single point called the „apex“.
Technically, the structure formed a rising wedge formation that typically leads to a price collapse.
The downward target on a rising wedge is the maximum distance between the top and bottom trend lines of the structure. In the case of Bitcoin, the length is nearly $ 5,500, bringing the wedge’s downside target close to $ 43,000 in the upcoming sessions.
The bears are not in complete control despite recent breakthrough attempts. It looks like a break below the lower trendline of the wedge will result in Bitcoin ( massive bitcoin investment planned! ) Receiving additional support from another upward trendline that represents an ascending channel pattern.
The price floor could set the stage for another leg up – a rebound move that could see Bitcoin test its refreshed all-time high of $ 49,700, followed by a close above $ 50,000.
Another bullish tailwind comes from Bitcoin’s relative strength indicator, which still has no overbought conditions, despite trading near the levels. As a result, the cryptocurrency could see a slight rebound towards $ 50,000, with $ 48,000-48,200 serving as an intermediate hurdle.
The on-chain indicators support a short-term bullish outlook. The data retrieved from CryptoQuant shows that stablecoins reserves are at record highs on all exchanges – suggesting that traders could use the dollar-pegged tokens to buy cryptocurrencies, including Bitcoin.
„If you are a long-term investor, now is the time to buy BTC,“ writes Ki-Young Ju, CEO of CryptoQuant. „I’m not sure how many corrections would be on the way, but the on-chain indicator says there are enough stablecoins on the exchanges compared to bitcoins to get another leg up.“
Macro Risks for Bitcoin
As traders and investors buy bitcoin and build their bitcoin positions, they expect a wave of risk from the possible better-than-expected rebound in the US economy.
In its latest report, Bank of America writes that the US dollar could see growth in 2021 as the US Federal Reserve suggests cutting back on its ultra-dovish stance by extending its $ 120 billion-a-month purchase program of assets reduced.
Strategists believe that policy normalization could appear by the beginning of next year.
In the meantime, the European Central Bank is likely to step up its easing programs, which in turn could weaken the euro. The dollar is likely to gain strength as a result.
Bitcoin could face a correction if global sentiment improves on the greenback and the US economy.