Bitcoin Forecast Top Analyst Risks for BTC
John Bollinger, the famous technical analyst, believes that Bitcoin could be on the way down. BTC has fallen 4.5% today since its peak following the explosive rally in the U.S. stock market.
Bitcoin, Gold and other “value keepers” retreated sharply after Pfizer reportedly announced a major vaccine milestone. According to Pfizer, a study of 44,000 people showed that the vaccine was highly effective.
After the news, the U.S. stock market soared, crashing Bitcoin Cycle and Gold in a short period of time.
Why do the Bollinger bands suggest consolidation?
The Bollinger Bands are a technical indicator developed by John Bollinger in the 1980s to show support and resistance zones.
When the price of an asset reaches the upper band, it indicates that it is overbought. Conversely, when it falls into the lower band, it indicates an overbought trend.
The daily chart of Bitcoin with Bollinger Bands.
After a sustained rally since September, the daily chart of Bitcoin is now floating just below the top of the Bollinger Bands. Bollinger on this:
“The short-term topping pattern on the upper Bollinger Bands indicates a correction of recent gains and/or some consolidation.
That Bitcoin has reached the top of the Bollinger Bands coincides with the first test of the $16,000 resistance level since 2017.
Over the past week, Bitcoin has consistently moved below the $16,000 level and has tested it repeatedly. However, each time it approached the level, a sharp retreat occurred. This trend suggests that whales are increasingly bidding for the $16,000 mark.
Given the high selling pressure of $16,000, a breakout above that level would likely lead to an attempt at a new record high. However, as long as it is not broken, BTC would likely continue to be threatened by consolidation.
Analysts dissatisfied with Bitcoin’s long-term trend
In the long term, analysts remain unimpressed by the price development at Bitcoin. PlanB, the creator of the S2F model, writes that “strong hand buyers” and algorithms would drive BTC higher:
“Watch now as these Bitcoins, which some stupid weak-handed sellers have sold in bulk in the last 4 hours, are absorbed by strong hand buyers with hundreds of intelligent little 0.01 BTC algorithm purchases. These BTCs will disappear into cold storage.”
A consistent thesis that the Bitcoin rally has added during 2020 is that institutional demand is increasing. Grayscale’s Assets under Management (AUM) is approaching $8 billion, while institutional inflows continue to grow.
The coincidence of the consistent accumulation of Bitcoin by the institutions and the repetition of the most critical technical level at $16,000 could reduce the likelihood of a major withdrawal.
Bollinger also stresses that only a consolidation phase could be on the horizon – not necessarily a major correction.
Typically, a consolidation just below an important key area is seen as an optimistic price trend.
As long as Bitcoin remains close to $16,000, the technical structure of Bitcoin at the macro and time levels remains positive.