In an unprecedented rally, Bitcoin has lately pushed past the $7,000 level. It is crucial to keep in mind the fact that this rally has come amidst a period of massive sell-off by investors. The COVID-19 pandemic has shaken up economies of several developed as well as developing nations. Financial Markets have recently witnessed their worst drop in several years.
- Bitcoin dropped below $3,800 on March 13.
- Since then, it was on a consolidation phase.
- Bitcoin rose past $7,200 again on April 2.
The non-organic rise of BTCUSD
At the time of publication of this article on April 6, the BTCUSD is trading at $7,005.10, which is another 4% increase from the previous day. Now, let me explain why this price rise is not organic.
- Investors are fleeing risky investments and assets in these tumultuous times. Gold and government bonds that are much safer assets are gaining importance. This suggests that there is no surge in demand for the Bitcoin.
- Richard D. Wyckoff was an expert Technical analyst whose name is taken in the same breath with other Technical analysts such as Dow, Elliott, and others. According to Wyckoff’s Accumulation Schematic #1: Events and Phases, an automatic rally occurs on selling diminishes after a prolonged period of massive sell-offs. At this point, even a small wave of buying pushes the prices to rise substantially.
- Now, this point can be easily proved if the daily chart of the BTCUSD is pulled up. The different regions, as stated by Wyckoff, such as the Preliminary support, Selling climax, Automatic rally, and the Secondary test, can be observed.
- It can also be observed that the price has significantly moved up. However, the traded volume is pretty low. This suggests the presence of market manipulators. These manipulators take advantage of an unprecedented surge or drop in prices.
Technicals still point to a Bearish outlook for the BTC
Closer inspection of the daily charts suggests that there might be a considerable decline in Bitcoin’s prices. If that happens, the BTC could drop to $3,500 levels. So enthusiasts of Bitcoin should be cautious in falling prey to the Bull trap right now, as good opportunities to buy are going to come by in a matter of time.
