- A bearish pennant pattern could culminate in Bitcoin price freefall likely to test $5,000.
- Bitcoin halving in May is expected to impact the price positively due to an increase in speculation, volatility and decreased supply.
The cryptocurrency market is facing bearish corrections across the board led by the largest cryptocurrency by market capitalization, Bitcoin. Recently, BTC/USD hit highs close to $7,500. However, increased selling action saw the price make a sharp turn round, testing the support at $7,200. Attempts have been made to pull Bitcoin above the critical $7,400 level but the path of least resistance remains to the downside.
In the meantime, BTC/USD is dancing at $7,281. The price is facing immediate resistance at the 50-day SMA. Analysis of the RSI shows that movement to the north will continue being limited. For instance, the RSI’s recovery from March lows seems to have stalled at 59 (could mark the beginning of a consolidation period). On the other hand, the MACD places the trend slightly in the hands of the bulls.
The formation of a bearish pennant pattern hints that Bitcoin investors have to prepare for a possible breakdown likely to retest $5,000 level. The only way to avert this fall would be to push Bitcoin above $8,000 heading into the May 2020 halving event.
Halving refers to the reduction of rewards per block miners receive. For Bitcoin, the event will slash the reward by half from 12.5 BTC to 6.25 BTC. It is expected to affect the supply of Bitcoin. At the same time, speculation, increased volatility, and demand could result in a rally pushing Bitcoin above the resistance at $9,000 and $10,000.
BTC/USD daily chart
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