By
Chimamanda U. Martha
April 19th, 2024
Bitcoin reaches its highest price for exactly a year at just over $12,000. At such a crucial level, the next couple of weeks will likely decide the currencies fate for the rest of 2020.
After recovering from the bearish impact of the coronavirus pandemic which saw the currency fall to $4,000, last weeks $1,000 candlestick from open to close with a total low-high range of $2,000 marked a technical momentum for Bitcoin (BTC) not seen for almost a year.
This sparked a dramatic increase in volume on all major exchanges. Coinbase saw their volume levels increase by 3x since the rise of the leading cryptocurrency. Similarly, trading activity reached an all-time-high on the Binance platform.
Reliving the spirit of 2017, some traders have found themselves in a frenzy of ‘fear of missing out’ (FOMO) out since the price gain. This is when a market trader – usually inexperienced it must be said – speculates on the price of an asset exclusively using the paradigm of psychological instincts.
Technical Analysis
The $12,000 level – previously a point of resistance in November 2017 during the previous parabolic bullish market, as well as during July-August of 2019 – has been tested as resistance once again with a candlewick spike. This came after new higher highs above the psychological level of $10,000 and strong-held resistance level of $10,300 confirmed yesterday.
Early signs from the daily chart suggest that Bitcoin may retrace from this level, however, it is the weekly timeframe which is a more significant indicator of future price movement right now. In the following few weeks, Bitcoin has two scenarios – make (breach $12,000 and sustain above), or break (reject from $12,000 and fall lower). We can call these bullish and bearish for convivence. Let’s analyze the cases for both.
Bullish Case
If this week’s 3rd August candle fills the previous week’s high wick, this will indicate a strong sustaining of bullish momentum. The more time it takes to fulfil, the less strength this bullish move has. A close above $11,750 this week would mean a clearing of both the previous resistance closures (July-Aug ’19), as well as the 78.6% Fibonacci level drawn from those levels to the lows of Mar ’20.
This scenario would likely take Bitcoin to the next upside target of $13,700 and all but confirm an overall bullish market to come for the remainder of 2020.
Bearish Case
After hitting $12,100, Bitcoin closed over $1,000 lower at $11,000. Looking at historical data, a similar pattern of wicking spiking and can be noted in and around this level with a bearish drop-off to follow – see Feb ’18 and Jun, Jul, Aug ’19.
The first level of support on any retract would of course by the psychological level of $10,000. Over the past 3 years this has been perhaps the most important price level for BTC, supporting and resisting its price on dozens of occasions. Any retrace would have to navigate this level before falling lower.
Using current highs, a retrace to the 61.8% Fibonacci level and previous support of $7,100 could be seen if price rejects hard from the current resistance. This scenario would allow Bitcoin (BTC) to gather more momentum and ultimately demand from the buyers to attempt a $12,000 break once again.
Concluding Thoughts
Despite all the hype surrounding recent Bitcoin momentum and the staggering price predictions from experienced investors – from a rationale and analytical side – the fate of BTC is still undecided. The market at this point could go either way. One thing is for sure, these next few weeks will be a crucial time for Bitcoin’s price for the remainder of 2020.