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December 16, 2020

Investing in crypto: short term vision on Bitcoin and the crypto market

Investing in crypto is becoming increasingly popular. The bots in the BOTS app do no different. In order to give everyone more insight into the world of crypto, we now share more in-depth information about investing in crypto every two weeks.

Investing in crypto: short term vision on Bitcoin and the crypto market
Investing in crypto: short term vision on Bitcoin and the crypto market

By: Steven Eblé

The Bitcoin rate

Bitcoin has experienced a significant price increase in recent weeks. The reason for this rise is due to the ever weakening US dollar and the fact that there is increasing institutional confidence in the virtual currency. Bitcoin has already appreciated more than 400% since its lowest point in March this year. What can we expect from the Bitcoin price in the short and medium term?

I'm going to take you with me in my analysis of developments in the Bitcoin award. It's good to say that no one knows exactly what's going to happen. Technical analysis is based on opportunities and all we can do is use indicators that give us an edge in the crypto market.

The price of the Bitcoin

Bitcoin's price is currently in a pattern called an ascending broadening wedge. It is formed by two upward, but moving trend lines away from each other. These patterns often break out downwards and then return to the lowest point of the formation (Chart 2).

Before this scenario is going to become reality, a daily candle close is going to be necessary, which is lower than the previously formed lowest point. This point is located around the 17600 US dollar, marked with the red line (chart 1). It so happens that this indicates that the trend is changing, because we're making a so called lower low. As I mentioned earlier, technical analysis is based on probabilities. In 80% of the cases the outcome is bearish with an ascending broadening wedge, and in 75% of the cases an ascending broadening wedge is a reversal pattern.

The RSI(Relative Strength Index) is currently overbought territory at the following address: tijdsintervallen  the weekly and  in- in, which often means that a correction is imminent.

Scenario

If the scenario reality wordt - zoals indicated in the picture hierboven - ligt the low point of the pattern(the formation) between 13000 and 14000 US-dollar. The zone between these two prices is also the highest point of the previous cycle in 2019. This makes it a strong support zone. This zone is shown in chart 3 with the two blue horizontal lines. When the price returns to the support zone, it is a healthy correction and a bullish retest. The chances of getting a full correction are just not very high because of the huge demand for Bitcoins at the moment. The zone between US$15000 and US$16000 would be more real.

Bullish Trading

Despite the fact that the chances of a correction after a 90% increase are high, we should not underestimate the bullish trading conditions. Until there is a clear outbreak of the trend pattern, there is no reason to believe that we will stop. There is even an indicator that indicates that the trend will continue upwards. On the daily time frame hidden bullish divergence can be seen on the oscillators. This can be seen by the price of Bitcoin making a higher high, while the RSI and MACD make a lower low. This indicates that the trend is not over yet and that we can see a price increase beyond all time high before a correction is made.

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