Bitcoin has lately been highly volatile. From its fall below $3,800 on March 12 to its rise above the $7,400 mark, it has been nothing short of an epic tale of highs and lows for the BTCUSD.
BTCUSD Chart on TradingView.com
Bitcoin is currently hovering around the $ 6,859.52 range.
As is the case with any Technical Analysis, there is no absolute right or wrong. Much depends on whether the analyst has a Bullish or a Bearish view. The same applies to various analyses regarding Bitcoin. Over the past few weeks, there have been a lot of mixed opinions regarding the fate of the cryptocurrency. This article aims at analyzing both sides of the coin: the Bullish, as well as the Bearish outlook.
Let us understand why some analysts have a Bearish prediction for Bitcoin
- Bitcoin formed a Death Cross, which is a strong Bearish indicator, on March 26, when the 50 DMA crossed below the 200 DMA.
- The daily chart indicates that the BTCUSD formed a rising wedge pattern, which is also a Bearish indicator. To break out of a rising wedge, Bitcoin would need to break out of the pattern with a significantly high volume.
- Bitcoin’s abrupt rise recently was accompanied by very less traded volumes. This suggested the presence of market manipulators who could have driven prices high merely to book profits.
- Financial markets worldwide seem to be crumbling under the Coronavirus panic. Investors are preferring to opt for safer assets such as Sovereign bonds, and ditch riskier assets such as Bitcoin.
- More than 16.8 million people have lost their jobs in the US alone in the last few weeks. This story is going to get darker as more factories and businesses are shutting down worldwide.
Sections of analysts have a Bullish view on Bitcoin because:
- The region between the $6,600 – $6,800 has historically proved to be a strong rebound zone. This support could hold the Bitcoin till potential good news arrives on the Coronavirus pandemic.
- Even if this support gets broken, as per the four-hour chart, the 200 MA could be another support level, which could restrict Bitcoin’s fall downhill.
- Governments and Monetary panels the world over are trying every trick in their arsenal to pull up the economy. The US Federal Reserve announced a $2.2 trillion relief package to ensure businesses and households have sufficient liquidity.
- The improvement in the Macroeconomic conditions would help investors regain the confidence to invest in Bitcoin again.
- Some European countries have reported declining numbers in terms of new COVID-19 cases. People are optimistic that the pandemic might have reached its peak, and things can only improve hereon. This sort of optimism can suddenly bring life back to the Financial Markets. And as the Financial markets improve, assets such as Bitcoin would also regain their attention.
