Bitcoin in 2 Main Scenarios – $16K or $9.6K, Traders Believe
The Bitcoin (BTC) price has dropped by over 6% in the past three days. This is even with the $276 million CME Bitcoin futures expiry coming up on August 28, 2020, while traders are nervous that an additional downside might be in store.
After BTC’s rejection at $12,500, traders expect two scenarios would happen during the short term.
Several technical analysts think that Bitcoin would go to either $16,000 or $9,600 first. However, the near-term outcome stays uncertain because it is dependent on a specific resistance and support levels being hit.
Either $16,000 or $9,600 BTC Price
Pseudonymous trader Byzantine General stated that Bitcoin might increase to either $16,000 or decline to $9,600.
In case BTC’s weekly chart finishes over $11,500, the trader explained the possibility of Bitcoin rallying to a $16,000 increase. If the price stays under $10,500, $9,600 would be the logical support.
Byzantine noted, “Let’s keep it simple. 11500 key level. If weekly close above –> 16k. If close below –> 10.5 ‘obvious support.’ Cuz obvious 10.5 might do nothing like 6k in ’19. 9600 is the next strong support (CME).”
Furthermore, one more compelling reason traders might expect a short pullback to $9,600 or to $9,700 is because of a CME gap. The said gaps form on the CME Bitcoin futures market’s chart because the regulated market finishes during the weekend.
A CME gap is usually closed within a short period of time. This then increases the chances of a pullback. Also, there is a small CME gap at $16,000, but only on a lower time frame chart where the gap has been around for years.
For the short term, another cryptocurrency analyst named Mayne mentioned that Bitcoin bulls must reclaim $11,700. If it fails to reach a higher resistance level, it might extend the consolidation phase.
The analyst said, “Here is what you don’t want to see as a bull, price with a false break high and now stair stepping down.”
Then, the analyst also noted that the past two moves up look like clear bearish retests. If this is distribution, see that selling would pick up speed soon, and bulls must come in and regain $11.7.
News Action
Previously, the price of Bitcoin momentarily surged to as high as $11,600 after Federal Reserve chair Jerome Powell’s speech on inflation. During the build-up of the speech, a lot of investors expected gold and Bitcoin to benefit from Powell’s talk about controlling the inflation rate.
Following the speech, the Bitcoin price quickly fell from $11,600 to as low as $11,125 on Coinbase. In a report, this might have been the confluence of the market pricing in the Jackson Hole symposium and the lower-than-expected inflation rate.
Then, the sell-the-news drop in the BTC and gold markets further intensified the downtrend. As a result, it made Bitcoin retrace to early August levels.
The plunge in the BTC price during the last three days also broke the short-term bullish market structure. This thus canceled out the higher low and higher high patterns.
