Bitcoin pull-back underway, but perhaps not for long

Bitcoin pull-back underway, but perhaps not for long

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Bitcoin broke out of its flag but hit resistance at $36,000. The retrace period could be quite short this time.

Sitting on strong support

More than two weeks within its bull pennant, the bitcoin price finally broke out on Wednesday and hit the 0.382 fibonacci resistance which is taken from the $69,000 top down to the $15,500 low, so a very major resistance.

Bitcoin is currently sitting at around $34,400, which is now below the top of the bull pennant, with the danger that the breakout becomes a fake out. However, a major trend line should act as strong support just underneath.

Historic retracements

So what next for the alpha cryptocurrency? There is the possibility that bitcoin decides to retrace back to the $30,000 level, as all bitcoin bull markets historically do tend to put in 20% to 30% pull-backs. Returning to $30,000 would only signify a 16.5% retrace - with $25,000 providing the deeper 30% plunge.

Momentum is to the upside

Be that as it may, momentum appears to be on bitcoin’s side right now, and after the Federal Reserve FOMC meeting and the announcement that rates would continue on pause, the future does look increasingly likely to see rate cuts rather than rises - an environment that would suit bitcoin to a T.

More investors from traditional finance must also be waking up to the attraction of bitcoin given the precariousness of global economies and the opportunity to put at least some wealth into practically the only asset class that is outside of the traditional financial system.

Having mentioned the potential downside to the bitcoin price, the upside must also be treated, and a break of the 0.382 fibonacci may logically take the price to the golden area of the 0.618 fibonacci which is located at $48,000.

At such a price level it will be difficult for the 97% of investors that either aren’t aware of bitcoin, or that reject its power, to not become fully cognizant of this monetary phenomenon. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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