Credit: Original article published by Bitcoinist.

The cost of one Bitcoin could end up plunging below its 2017’s record high of $20,000.

That is, according to a pseudonymous analyst, who determined the cryptocurrency’s bearish outlook based on a classic head and shoulder pattern. As of early Wednesday, BTC/USD had painted four out of five key components that confirm the said reversal indicator. They included three peaks with the middle one larger than the others, supported by a so-called neckline.

“If we are going to below $30,000, the previous [neckline] support will turn into resistance […] We could fulfill the H&S pattern’s price target, which could take the price below the $20,000 level,” the analyst warned.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT

Bitcoin H&S Pattern and its breakout target area, as highlighted by MM Crypto. Source: BTCUSD on TradingView.com

On-Chain Bitcoin Metrics Bearish

The statements appeared following Bitcoin’s latest pullback from its sessional resistance area above $36,000. The price plunged to as low as $32,309 on the Coinbase exchange as traders assessed profit-taking scenarios.

That was visible in Bitcoin’s on-chain metrics. Ki-Young Ju, the chief executive of blockchain analytics firm CryptoQuant, confirmed that the latest BTC/USD correction coincided with miners dumping their holdings. Meanwhile, exchanges witnessed fewer stablecoin deposits, and the Bitcoin flow into the over-the-counter wallets slowed down throughout this week.

“We might have second dumping,” stated Mr. Ju just right before BTC/USD plunged towards $32,000.

Pattern Timeframe

Mainstream traders and analysts agree that a meaningful price reversal is less likely to emerge from a shorter-term Head and Shoulder pattern—the one spanning between a day to three weeks. Meanwhile, the longer-term patterns active for at least six months mark the return of bears.

“The head & shoulders pattern can develop over virtually any timeframe,” analysts at Schwab stated. “However, most traders believe that patterns that take a longer time to form are more significant and more likely to identify a meaningful price reversal.”

Volume is likely to play a key factor in determining Bitcoin’s current H&S pattern. A breakdown below the neckline support accompanied by a spike in trades would more likely validate $20,000 as its downside target. On the other hand, meager volumes on any negative breakout would mean a rebound towards $35,000.

Meanwhile, analyst Jonny Moe sees a bullish reversal, noting that the H&S pattern may turn out to be an Ascending Channel indicator.

Bitcoin Ascending Triangle outlook sees price back at $40,000. Source: Jonny Moe

“Worth noting we’re still inside this more localized downtrend,” he explained. “[I] would like to see this downtrend broken to add a little more pattern confidence.”

This article is strictly for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. CryptosOnline.com does not provide investment, tax, legal, business or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any loss or damage caused or alleged to be caused by, or in connection with, the use of or reliance on any content, goods, services or opinions mentioned in this article.

#Bitcoin #Cryptocurrency #Crypto

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