Recent weeks have seen volatility, making crypto prices down marginally. This volatility is in the middle of a larger market selloff motivated by investors who recalibrated their portfolios in ensuring a highly aggressive Fed. In return, many expect skyrocketing rates up to seven times in 2022.
The world’s most popular and largest cryptocurrency, Bitcoin (BTC), last traded marginally $42,481, which is lower by 0.6%. In November 2021, this cryptocurrency has its peak at nearly $69,000 after the risk aversions growth with the global banks started to take away liquidity of the pandemic-era from the system and tighten financial conditions.
Since March of 2020, BTC has been up 1,039%, though these rallies have been broken up by various selloffs. Oanda Senior Analyst Ed Moya said that BTC has “really become the ultimate momentum trade and there so many risks that can trigger a 40% drop out of nowhere.”
The crypto’s volatility has pushed some analysts to point out possible significant price levels or try to gauge its fair value. JPMorgan analysts even estimated the currency’s fair value at $38,000. Meanwhile, Vanda Research said, “there could be a large short-squeeze if the aforementioned threshold is crossed, and retail investors return to crypto-trading.”
BTC Entices Bulls Prior to Culling
Over the past two days, BTC’s price has shown a notable increase in buyers, which leads to a quick run-up. Since BTC retests a crucial psychological level, many analysts expect this uptrend to last. This also makes buyers hope for a bull trap.
After several retests of the weekly support level, the cryptocurrency bounced off and gained a 16% uptrend so far. This minor uptrend provided altcoins the momentum and space to pop off, but many see it as a trap employed by the bears before sending the currency crashing – known as a bull trap.
Because of the bearish breaker formation, investors have to expect a crash. On September 2021, Bitcoin price action ended up with two higher highs, while there was an uptrend illusion on November 10, 2021. In return, a demand zone was created, extending from $40,749 to $44,387.
However, on January 21, the cryptocurrency sliced through that demand zone, which resulted in a bearish breaker and even left holders underwater. A retest of this breaker may only trigger a significant selling pressure that will only crash BTC price.
Bitcoin sometimes pierces through the bearish breaker and retests a weekly resistance barrier, a confluence of the 50-day SMA (Simple Moving Average), and the $43,000 level. Rejection is expected if BTC approaches the breaker’s $40,749 lower limit and continues to trend higher. The $29,100 weekly support level adds credence to this outlook.
So, many analysts conclude that the technical perspectives will lead to a $30,000 or lower move in the coming days for BTC price.
Three Indicators Predicting BTC Price to Fall to $24,000 to $27,000 in 2022
According to analysts Ari Rudd, if BTC charts zoom out longer to longer timeframes, the price will be in the middle of a large bear cycle.
More and more individuals in the crypto space expect BTC to fall below $30,000 in the next months as Rudd brought technical indicators that explain why BTC’s ongoing price recovery may not result in strong legs.
Here are the three long-term indicators that come with extremely bearish outlooks presented by Rudd:
BTC LFG Model
Rudd utilized a BTC price prediction model known as Logarithmic Fractal Growth (LFG) that relies on the fractal consisting of logarithmic scales on both axes. LFG then projects where the cryptocurrency may go next according to the historical price actions. He applied this price prediction model on the monthly BTC/USD chart.
Based on Rudd’s BTC/USD monthly chart using the LFG model, the LFG levels posed as distribution/accumulation zones during the past bearish cycles. So, the analyst model that BTC still had to fall to the lowermost level range. That range is known as the buying area that once coincided with bottoms that occurred in 2018 and 2020 BTC price crashes.
Rudd said, “We are a few months away from reaching the accumulation phase.”
“Best possible scenario for buy opportunities will be 24K–27K levels,” he added.
Weekly Relative Strength Index (RSI)
The BTC’s weekly RSI is another moving average ribbon indicator set up on weekly timeframes that serve as a tool to cap BTC’s ongoing price rebound. Rudd hinted at a strong resistance that could provide a further bearish outlook if combined with weekly RSI.
With RSI, traders have critical cues about bearish and bullish price momentum. The independent analyst stated that buying momentum weakened around the downward sloping trendline of RSI, giving a hint of possible selloff for the BTC/USD pair.
Ribbon Support
Moving average ribbons, similar to the LFG model, comes with accurate coincide with the end of BTC’s bearish cycles on a quarterly frame. These ribbons represent a range of MAs (Moving Averages), enabling traders to determine the support areas and key resistance by checking the prices associated with MAs.
Each top-to-bottom trend of BTC involved exhaustion near its ribbon support. As BTC undergoes another price correction, Rudd suggests that the crypto’s strong bounce from $33,000 is likely a bull trap.
Rudd said the BTC price is “due to retest the Ribbon support on [the] quarterly chart.” In return, the moving averages ribbon indicator will risk BTC by sending to $25,000 or below.
Should Bitcoin Fall Below $30,000 to Start Rising Again?
Bitcoin has started the year on a sour note. Since then, it has been struggling. In 2021, it went on a fantastic price fluctuation, and since November, its price has constantly been declining every day.
The cryptocurrency has already fallen below the barrier of $40,000, which is 40% down from its $69,000 high in November. According to analysts Mark Newton, if BTC falls below that level, it becomes bullish.
A drop below that level is possibly the result of the $32,950 test. Lifting the BTC price above $40,000 can be a spectacular milestone for bulls. On the other hand, the market has undergone significant sell-offs close to that price point in recent times. That indicates that the analyst’s forecast threshold has not yet been reached.
The cryptocurrency is more likely to fall below $35,511 rather than providing bulls with above the $40,000 mark due to plenty of price drops in a short amount of time. If it fails to hit that milestone, BTC might remain on the downward trend. Bitcoin will also stay in the downward sloping pattern if it does not exceed $40,00 on a daily close.
Meanwhile, several indicators provide a short-term bullish outlook, unlike the bearish technical indicators. For instance, the cryptocurrency holds at least 1,000 more tokens added to their balances on the recent upside correction. This indicates that the wealthiest investors support the currency’s recovery.
The BTC amount held by exchanges fell to the lows within the three-year timeframe on the past two days. So, many analysts think these are enough to eliminate the possibilities of decline.
According to analysts, the bullish outlook is only be seen after Bitcoin sets up a higher high of over $52,000. So, investors can expect BTC price to continue that trend while making a run for the psychological barrier of $60,000.
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