The Bitcoin (BTC) price showed extreme volatility by consolidating below a key level of $ 10,000. Was before The price dropped to $ 8,100 on May 10, just a day before the long-awaited mining premiums halved.
After the 20% decline, traders are still divided over where the Bitcoin price would go next Some believe that he can immediately see a resurgence in the resistance range from $ 14,000 to $ 15,000.
Historically, when the price of Bitcoin continued to recover, it slightly exceeded key resistance levels. For example, it took 28 days for Bitcoin to rise from $ 8,000 to $ 20,000 in December 2017. In June 2018, the price of Bitcoin rose from $ 7,500 to $ 14,000 in just three weeks. thats why The BTC price tends to rise significantly in a short period of timeEspecially if there is strong demand from private investors.
However, other traders predict that the price of Bitcoin will test lower levels of support after falling to $ 8,100. since Bitcoin fell after halving in the last two halvesTechnical analysts expect BTC to retest the $ 6,000 region at its lowest point.
The bullish scenario for Bitcoin after halving
The main bullish scenario after halving the Bitcoin block reward is the breakout of an important trend line above $ 14,000 in 2017. Last year Bitcoin’s price moved within a large multi-year cycle set by its record $ 20,000 and high of $ 14,000 in June 2019. Every time the price of Bitcoin almost broke the bandwidth, it was violently rejected.
Bitcoin price in a multi-year cycle until December 2017. Source: Satoshi pinball machine
When the current momentum of Bitcoin is overwhelmingly strong and breaks the trend of several yearsthere is a possibility that this will trigger a big upward trend. Cryptocurrency operator Satoshi Flipper he said::
“”I still bet to break the resistance of the upper trend line and the price movement in the north. My beliefs will not change under any circumstances, as some clowns have sold their BTC and one day the price has dropped. “
A technical Bitcoin analyst known as “Galaxy” repeated a similar prediction and said so The last time BTC saw seven consecutive weekly candles there was a 160% increase. In the past seven weeks, the price of Bitcoin has continued to rise without further setbacks, the last time it occurred in December 2018. After seven weeks, the price rose from $ 3,100 to $ 14,000 in just seven months through June 2019. Galaxy he said::
“”See what happened the last time we had 7 consecutive green candles a week. We had a doji candle, followed by a 160% increase. It looks like a trip awaits us. “
F.Bitcoin weekly ractal between early 2019 and 2020. Source: Galaxy
Bitcoin’s medium and long-term positive trend, based on fractals and technical indicators, is fueled by the entry of high-profile investors into the cryptocurrency market. In an interview with CNBC, billionaire hedge fund manager Paul Tudor Jones said trust in Bitcoin will increase over time. He stressed that the asset is only 11 years old and is in an early growth phase. Jones said:
“When it comes to trust, Bitcoin is 11 years old. There is very little trust. We are seeing the birth of a store of value. Time will tell whether you are successful or not. What I do know is that with each passing day and Bitcoin surviving, trust in it increases“”
Given Jones’ influence on the financial market, there is a possibility that other institutional investors will follow suit to invest in Bitcoin. G.rayscale already recorded institutional investments of more than $ 380 million in the first quarter of 2020and complements Bitcoin’s bullish scenario after halving.
BTC’s short-term bearish scenario
Several cryptocurrency traders expect this in the short term The Bitcoin price will drop to $ 6,500. There are strong arguments for a temporary downward trend in prices after halving. The confluence of Bitcoin near the large resistance at the top of $ 10,500 and historical data indicate a sharp decline after halving.
To Bitcoin trader Dave the Wave: If the price of Bitcoin continues due to a fractal from 2019, a withdrawal to the $ 6,000 region is expected:
“”If the fractals continue, it’s time to think about consolidation levels. A real consolidation of 50% would bring BTC into the 6K range. Everything is fine to continue“”
$ 6,400 is an important point for the price of BTC. Source: Dave the wave
The $ 6,000 zone between $ 6,400 and $ 6,600 is also of significant historical importance. In the third quarter of 2019, the price of Bitcoin fell from $ 10,500 to $ 6,410. It consolidated in the $ 6,000 range for four weeks before exploding again at $ 10,500 in February 2020.
A drop to $ 6,400 would consolidate the $ 6,000 support area and strengthen the Bitcoin rally for a more robust and widespread upward trend in the second half of 2020. A cryptocurrency trader known as a “wolf”, raised a similar concern. Bitcoin’s price has moved in an ascending triangle pattern since its sudden recovery of $ 3,600 on March 12.
The sudden drop in price to $ 8,100 on May 10 caused the formation to collapse, making Bitcoin technically vulnerable to a major correction. At that time, crypto investor Scott Melker said that the market had experienced a major shock. milker added::
“”That was the candle with the highest hourly volume since the epic crypto drop on March 12th. I will not rush into a position until this shakes a little. It was a real sale that we just saw“”
Bitcoin runs the risk of being broken by an ascending triangle. Source: wolf
A $ 10,000 withdrawal would give the market some stability after a 160% increase in two months. Bitcoin’s price rose almost three times, with only a few corrections that worried technical analysts about the sustainability of the surge.
Possible variables that can influence Bitcoin price developments in the short term
In the short term, the price of Bitcoin faces two main variables: a sudden influx of capital from institutional investors and the surrender of small miners. Given that institutional investors have allocated hundreds of millions of dollars to Bitcoin in the first three months of the year, there is a high probability that a larger amount of capital will come onto the market after halving.
Barry Silbert, the CEO of Grayscale, said in a tweet that his investment company reached Assets under management of $ 3.7 billion on May 9, a record high for the company. Grayscale said in its first quarter report:
“The investment of hedge funds is gaining momentum: 88% of entries for this quarter came from institutional investors, the vast majority of which were hedge funds. The mandate and strategic direction of these funds vary widely and include multi-tier, macro-global, arbitrage, short and long term equity funds, event driven mutual funds and funds focusing on cryptocurrencies. “
Conversely, one variable that can cause a short-term downward trend in Bitcoin is that Possibility of surrender by small and above average miners. After halving, mining costs will range from $ 12,500 to $ 15,000, depending on the level of difficulty, as explained in the TradeBlock report in early 2020.
While the cost of mining Bitcoin is likely to be lower than most estimates, miners will be at least several months at a loss, despite the lower forecast of $ 12,525. Bitcoin’s relatively low price opens the BTC network to miners surrender and forces small miners to sell BTC. Digital asset manager Charles Edwards tweeted::
“This will be the most brutal halving of Bitcoin ever. Production costs double to $ 14,000. 70% above the current price. In the last halving, the price was only 10% below production costs and the price plummeted by -20%. Now expect a big capitulation in mining without FOMO. 30% + ”
Both variables are unlikely to significantly affect Bitcoin’s price in the short term They represent extreme scenarios. BTC is now at a critical point that could determine price developments over the next 12 months Overall, retailers remain optimistic about the BTC price development in the long term.