Worldsfeed Finance Desk: Is Bitcoin on the brink of another price plunge, or is a rally in the cards? As Bitcoin continues to trade 60% below its November 2021 all-time high, the crypto community is split on what the future holds for the digital currency.
Bitcoin has displayed resilience in 2022, surging 70% from its low of approximately $16,800 in November. This ascent defied concerns about rising interest rates and rode on the wave of optimism surrounding the approval of exchange-traded funds (ETFs).
Yet, the past few months have seen Bitcoin struggling to maintain a foothold above the $30,000 mark. With the highly anticipated “bullish” halving event still more than 200 days away, many traders are pondering the possibility of another Bitcoin price crash.
Examining the Technicals:
From a technical standpoint, Bitcoin’s price has found stability around the 0.236 Fibonacci retracement line, drawn from its all-time high of $69,000 to its local low of $15,900. This pattern of price action bears striking resemblance to the market conditions during the 2018 Bitcoin price correction.
In 2018, BTC/USD stabilized around the 0.236 Fib line, hovering at around $6,790 for months before plummeting to $3,000 in December. Interestingly, this $3,000 level coincided with what is now a multi-year ascending trendline support.
The current scenario suggests that Bitcoin might be repeating a similar pattern as 2018, with the price seemingly flatlining at the 0.236 Fib line. A breakdown from this level could potentially lead to a support level of $21,500, marking a 17.75% drop from current levels.
The Strengthening Dollar Factor:
Adding to Bitcoin’s downside risks is the strength of the U.S. dollar, as indicated by the U.S. Dollar Index (DXY). The DXY measures the dollar’s strength against major foreign currencies and has recently reached its highest level since November 2022.
Throughout 2023, there has been a negative correlation between the DXY and Bitcoin’s price. The dollar’s recent surge gained momentum following the Federal Reserve’s rate decision, and it is currently on its 11th consecutive week of gains. This implies that Bitcoin’s upside potential could be constrained if the dollar maintains its ascent.
On-Chain Metrics and Analyst Opinions:
Bitcoin’s on-chain metrics provide a mixed outlook. The Coin Day Destroyed (CDD) metric, which gauges the actions of long-term investors, spiked on September 19, indicating that some long-term Bitcoin holders have moved their coins—potentially signaling profit-taking or strategic repositioning. Historically, CDD spikes have often preceded price declines, prompting traders to exercise caution.
Opinions among Bitcoin analysts vary. Some, like popular trader Skew, suggest that Bitcoin could reach $30,000 by October, citing thin Ask liquidity near $27,000 as a potential trigger for a breakout.
On the other hand, analysts like Rekt Capital don’t rule out a price correction toward $18,000, drawing on a pre-halving fractal. The next 140 days are seen as crucial for dollar-cost-averaging in preparation for the post-halving parabolic rally.
As we enter the final quarter of the year, Bitcoin’s price trajectory remains uncertain, with factors like technical patterns, the strength of the dollar, and on-chain metrics all contributing to the complex puzzle of cryptocurrency predictions. Investors and traders are advised to stay vigilant and make informed decisions in this dynamic market landscape.
Disclaimer: This article does not constitute financial advice and is for informational purposes only. Cryptocurrency investments involve risks, and readers should conduct their research and consider their risk tolerance before making any investment decisions.