Home Bitcoin Price Prediction: BTC freefalls from $40,000 as critical bearish pattern comes into the picture
Crypto News

Bitcoin Price Prediction: BTC freefalls from $40,000 as critical bearish pattern comes into the picture

  • Bitcoin pierced through $40,000 for the first time and established a new all-time high at $40,425.
  • Support above $36,000 has seen BTC bounce back to $38,000.
  • A rising wedge pattern on the 4-hour chart suggests that a reversal is imminent.

Bitcoin hit $40,000 for the first time in history on Thursday. However, the bellwether cryptocurrency did not stay up for long as a bearish wave swept across the market, forcing the prices down to an intraday low of $36,625 on Friday.

Bitcoin bounces back to $38,000, but the uptrend remains in jeopardy

The world’s most valuable cryptocurrency is exchanging hands at $38,340. Volatility is still exceptionally high, making it difficult to predict the asset’s short term price action.

However, the 4-hour chart highlights the formation of a rising wedge pattern. This is an extremely bearish pattern in technical analysis. It is created by connecting an asset’s higher highs using a trendline. On the other hand, its higher lows are also connected to form a wedge.

The pattern suggests that the asset’s trading volume is decreasing, and a reversal is likely in the near-term. A breakdown tends to occur before the trendlines converge. If validated, price action is usually drastic, which calls for alertness to take full advantage of the bearish pattern.

BTC/USD 4-hour chart

BTC/USD 4-hour chart

If Bitcoin closes the day under $38,000, more sell orders will be triggered. An increase in overhead pressure might force BTC to explore lower price levels towards $34,000 and $30,000, respectively.

The 50 Simple Moving Average is in line to offer support and perhaps prevent losses from extending to $30,000. Similarly, the 100 SMA will absorb some of the selling pressure if BTC/USD slides under this critical level.

On the other hand, the pessimistic outlook will be invalidated if Bitcoin closes the day above $38,000. Some semblance of stability may call for more buy orders as investors push for gains above $40,000. Some analysts like Peter Brandt believe that Bitcoin is not anywhere close to its potential and could clock $50,000 in the short-term.

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.