Over the past month, the crypto market, led by BTC/USD, has made a steep upward trend. Thus, the Bitcoin price has recovered from lows at around $ 29,000 in July at a rapid pace and climbed back above the $ 50,000 mark for the first time since May 2021 on yesterday’s trading day. Within a few weeks, the lead currency has exploded by more than 70 percent.
BTC Finds Strong Hurdle at $ 50,500
Buyers of BTC have been able to make massive profits with it since July. However, the bears are now returning impressively. For example, the lead currency was only able to briefly hold above the psychologically important $ 50,000 and has since had to accept a correction to around $ 48,000 at the time of publication. Thus, the minus of the last 24 hours is about 2,5 percent, as the figures of coincodex.com show.
However, the decline is currently still manageable and on a weekly basis there is still an increase of almost 5 percent. The increase in recent weeks has also been characterized by small setbacks from which BTC/USD could recover quickly.
Therefore, the question for investors now is whether it is again just a healthy small correction before Bitcoin continues to rise towards new all-time highs. Or is it different this time and Bitcoin is at the beginning of a longer-lasting downtrend?
Bitcoin Leaves Rising Wedge: Bearish Scenario?
Hints for the further price forecast of Bitcoin can provide the technical chart analysis. For example, the BTC/USDT chart of the crypto exchange Binance shows that the lead currency has been in a large chart pattern since July 20. The formation of the rising Wedge was started in the area of lows of around 29,000 dollars. This price range is the starting point of the support line of this chart pattern.
The resistance line of the formation, however, finds its starting point at around 39.400 dollars. In recent weeks, BTC has tested both resistance and support line multiple times. Due to the many points of contact, a valid chart pattern can be spoken of.
The maximum value of the Rising Wedge is around $ 54,000. Because this is where the resistance and support line meet, so the pattern ends. However, price usually breaks out of a chart pattern up above the resistance line or down below the support line much earlier.
The rising wedge is considered a bearish pattern in technical analysis. That is, a breakout to the downside is much more likely than price to exit the trend channel to the upside. The 1-hour chart shows that BTC / USD actually briefly broke above the resistance line in the $ 50,000 area yesterday trading day and was able to rise to $ 50,500.
However, the Bitcoin price has not managed to keep this mark and shortly afterwards BTC has fallen back into the chart formation. In this case, one has to speak of a fake-out. As a result of such fake-outs, there is often a rapid counter-movement of prices in the other direction.
This is exactly the scenario that has now occurred. Bitcoin is significantly downgraded and has once again tested the support line, which is around $ 48,250 at the time of publication. The Bitcoin price is currently below the support line and has thus left the chart formation downwards.
Beware of fake outs in Bitcoin price
However, investors should currently still evaluate this breakout downward with caution. Because in the course of the past few weeks, the Bitcoin price has already shown fake-outs below the support line and could briefly find its way back into the chart pattern later.
For example, on August 18, BTC/USD lost support for the formation and quickly corrected from $ 45,000 to $ 44,000. In the process, the breakout downwards was even initially confirmed with a retest of the support line as a new resistance line. This is actually considered an important sign of confirmed price action in technical analysis. However, already on August 19, Bitcoin was able to return to the pattern and continue its strong upward trend.
That’s why it’s too early to write off the cops. If BTC/USD manages to climb back into the price range of $ 48,250 to $ 48,500 in the next few hours, Bitcoin could return to the formation and possibly rise significantly higher.
However, at the current time, the bears seem to be developing more strength. So, what level could Bitcoin fall to when the bearish scenario occurs?
Bitcoin soon back at $ 29,000?
In principle, the starting point of a rising wedge is also considered a price target for the subsequent correction. That is, Bitcoin could correct back to $ 29,000 in this worst-case scenario and possibly form a double bottom in this price range, which in turn represents a bullish price pattern.
In this case, the highest point of the rising wedge at $ 50,500 could become the neck line of a new formation. According to technical analysis, the price target in this case would be at the level of the difference between the floor and the neck line. In concrete terms, the difference is $ 21,500. The price target would therefore be $ 50,500 + $ 21,500. That is, Bitcoin could again form a strong bullish trend after the correction scenario, which would lead the price up to $ 72,000. That would be a new all-time record for the Bitcoin. But it is still a purely speculative scenario.
However, the chart analysis shows yet another chart pattern for the Bitcoin. So BTC also moves in a falling wedge.
This large chart image was already formed at the beginning of 2021 in the price range of 40,000 dollars. Here is the starting point of the falling support line of the chart formation. This was tested several times during the year. Approximately in the range of $ 39,000 in February, and during the correction initiated in May in price ranges between $ 33,500 and $ 30,000.
Worst Case Scenario: $ 12,000 in July 2022
The resistance line, in turn, will start at around 61,000 dollars in April 2021. Further points of contact will be found in May 2021 at around 58,500 dollars and most recently from mid-August at 48,000 dollars. Should Bitcoin continue to follow this formation, the Bitcoin price could experience a steady correction in the coming weeks and months. Because the falling wedge is characterized by falling prices before leaving the pattern.
Due to the size of the chart formation, the resistance and support line will not meet until July 2022 at around $ 12,000. Thus, Bitcoin could remain in an almost one-year downtrend, provided this worst-case scenario occurs.
However, even in the case of this formation, it is to be expected that an eruption from the chart formation will take place much earlier.
From $ 72,000 to $ 12,000 – Bitcoin currently holds exciting price scenarios for investors that could hardly be further away from each other.