Bitcoin (BTC) is currently trading around $6,400 and will now complete either of two most likely scenarios. Scenario A will be a Bitcoin (BTC) short squeeze as market makers force bears to cover their shorts resulting in the price surging past $7,200 in a matter of hours. Scenario B will be letting Bitcoin (BTC) retest $6,000 which will result in a natural inflow of buyers as demand level is reached. RSI level for Bitcoin (BTC) currently points to a reversal either way. It may happen before $6,000 or at $6,000 but the market seems poised for a reveral at this point.
Bitcoin recently broke a rising support line and seems to have broken market structure. However, it cannot be confirmed unless Bitcoin (BTC) drops and closes below $6,000. That would be a unanimous structural breakdown and will likely trigger some selling as stop losses are hit. It could also result in some panic selling but given the recent price action of Bitcoin (BTC), the bears are losing control as the bearish pull weakens with every passing day. This does not mean that the bulls are in charge. The price has to break and close above $10,000 to see any significant bullish impetus. Until that happens, Bitcoin (BTC) is likely to trade between $6,000 and $10,000 at least for the next few weeks. This would provide traders with favorable day trading opportunities but for investors and hodlers, it is going to be a long wait.
All things considered, it is plausible to assume that Bitcoin (BTC)’s worse days are behind us and the price should start stabilizing gradually now to prepare for the next run up. Some analysts that call for a long term bear market completely ignore strong indicators that point to a reversal in the near future. The price could go down more but to expect it to keep going down for a long time would only be true if interest in Bitcoin (BTC) was fading every passing day for it being a fraud or scam. It would also be true if a global recession could hurt Bitcoin (BTC) like it can the stock market or for instance, the real estate market. In case of a financial meltdown, investors would be rushing to buy Bitcoin (BTC) because local currency would be losing its value by the day whereas Bitcoin (BTC) would be rising in value as more and more people look for a safe haven.
Bitcoin Shorts (BTCUSDShorts) on Bitfinex has currently reached an extremely overbought territory. This means that the bears have become far too comfortable and complacent. This kind of behavior usually results in a trend reversal. The price also appears to be trading in a rising wedge. A break out below this wedge would have major implications and could push Bitcoin (BTC) into a long term bull market. This would also coincide with investors’ fears of an upcoming stock market crash and the quest for a safer and more profitable investment than gold.