An overnight sell-off in the Bitcoin market Monday brought its prices down from an intraday high of $34,888 to as low as $31,435.
The approx 10 percent decline occurred as traders’ anxieties mounted over a JPMorgan report that cast doubts over Bitcoin’s potential to retest $40,000. According to Nikolaos Panigirtzoglou, the lead strategist at JPMorgan & Chase, one of the major catalysts behind Bitcoin’s supersonic rally was the Grayscale Bitcoin Trust, which amassed about $20 billion worth of BTC during its 1,000 percent price rally.
Nevertheless, the last couple of weeks saw a decline in the New York fund—of about 22 percent—that surpassed Bitcoin’s very own downside correction of 17 percent.
Mr. Panigirtzoglou added that a drop in Grayscale’s accumulation spree might hinder Bitcoin’s attempt to reclaim $40,000 or the levels above it, adding that “the near-term balance of risks is still skewed to the downside.”
Bitcoin Descending Triangle
The bearish fundamental risked activating a classic bearish reversal pattern that has emerged on the Bitcoin charts lately. The BTC/USD exchange rate has been forming a sequence of higher lows on repeated upside rejections while holding its footing at a horizontal support area. The pattern appears like a Descending Triangle.

Bitcoin’s Descending Triangle pattern risks crashing price to near $20,000. Source: BTCUSD on TradingView.com
In retrospect, a Descending Triangle’s formation in an uptrend points to a reversal.
Most traders look to open a short position following a high-volumed breakdown from the pattern’s lower trendline support. Typically, the price target is as much as the Triangle’s maximum height. In Bitcoin’s case, it is more than $11,000 that puts the cryptocurrency at risk of slipping below $20,000.
Nevertheless, certain adjustments to the support trendline change the entire bearish setup by turning Descending Triangle into a Bull Pennant.

Bitcoin’s Bull Pennant setup expects the price to surge by another $20,000. Source: BTCUSD on TradingView.com
So it appears, Bitcoin has simultaneously formed lower highs alongside the higher lows, forming a Symmetrical Triangle in an uptrend. In retrospect, it is a bullish continuation pattern that could have traders open long positions following a high-volume breakout above the Triangle resistance trendline.
The Pennant’s upside target is as high as the flagpole formed before it (~$20,000). That puts Bitcoin en route to at least $50,000 should the bullish bias sustain.
Bullish Fundamentals
Fundamentals that could trigger Bitcoin’s Bull Pennant include the US coronavirus stimulus, the Federal Reserve’s pro-inflation policies, and a bearish outlook for the US dollar. That has prompted many corporations and investors to seek hedge in Bitcoin due to its similarities with safe-haven gold.
“We’re talking about Bitcoin over the next three, five, ten years slowly inching away at gold’s market capitalization,” Vijay Ayyar, head of Asia Pacific with Singapore-based crypto exchange Luno, told Bloomberg Tuesday. “If that happens, you are way over $50,000.”
BTC/USD was trading above $32,000 at the time of this writing.
Forex Trading can be risky, to cut the risk. Sign up to FX Delta for consistent results. The Best Forex trading signals for an average of 8% gains. Click here to sign up.
Source link