Bitcoin seems to have lost steam after crossing the coveted $10,000 mark. Several investors who purchased BTC for quick gains following the halving are now dismayed.
However, our analysis suggests that this fall was imminent. $10,000 was always going to be a psychological barrier for any investor in the short term. Long term investors would not fret over these up or downswings of Bitcoin.
Bitcoin likely to enter a consolidation phase soon
Source: TradingView.com
If we look at the BTCUSD daily timeframe, we notice that the small region between $8,633 and $8,749 was a consolidation zone for more than ten times this year.
Bitcoin is currently trading around $8,756. It is just above the $8,749 level, but with low volumes and no strong bullish signs, it would reach the consolidation territory again soon.
The technical outlook for BTC
Our analysis shows the possible scenarios for Bitcoin and its price movement. We highlighted two curves in the BTCUSD daily chart and marked them ‘1’ and ‘2’.
- Situation 1 or curve 1 shows BTC displaying a short burst of momentum and rising. Above a particular level, likely around the $10,000 mark, the psychological barrier would come into effect. It will result in another sell-off. Bitcoin will probably come back to its original support zones and then bounce back.
- Situation 2 is BTC declining further and retesting its support zone at $8,200. Once it touches that level, Bitcoin will bounce back higher.
So what should you do with your Bitcoin holdings now?
Bitcoin investments are very volatile. And swing traders and short term investors might book profits and exit positions. However, for long-term investors, Bitcoin will act as a Wealth creator and a hedging instrument.
Therefore, all those investors who bought BTC with a long term view, need not panic at those minor declines and should hold onto their Bitcoin holdings.
