Bitcoin pumps up to $38,000 – but charts warn of crash to $20K
In a sudden burst of strength, the bitcoin price has risen to as high as $36,500 this morning. However, analysts are warning of a crash to $20K.
Earlier, the benchmark cryptocurrency trimmed its earlier gains above $34,000 and fell as much as 6.83 per cent to trade at an intraday low of $31,990. BTC added over 18 percent to its Bitcoin Profit software valuation after falling below $30,500 in previous sessions.
But higher selling pressure in the $34,000-36,000 range limited the upside, leaving the price in a choppy range.
As it stands, Bitcoin began to form a series of lower highs after hitting a record high near $42,000 on 8 January. Meanwhile, stronger buying sentiment in the $30,000-31,000 range served as support.
The entire trading range appeared like a Descending Triangle, a bearish reversal/continuation pattern viewed by professional traders.
At midnight on Friday, Bitcoin retested the upper trendline of the triangle for a breakout, but failed. A pullback followed, and the price fell back – to retest the lower trendline of the channel. The odds continued to rise, with CryptoQuant CEO Ki-Young Ju also releasing a bearish on-chain signal.
The blockchain analyst noted a spike in the so-called „exchange whale ratio“, which represents the top 10 bitcoin transactions divided by total inflows. When the ratio stays below 85 percent, it signals a bull market.
Conversely, a value above 85 percent warns of a bearish attack.
On Friday, the „exchange whale ratio“ hit its eight-month high, prompting Ju to say that „BTC could have a big red candle if the price falls.“
„It should be below 85% if this bull run is legitimate. Otherwise, it’s probably a bull trap,“ Ju said.
The $20K price target
Bitcoin’s descending triangle formation suggests a deeper price decline if the price breaks below its support level.
Technically, an asset should fall around the maximum distance between the triangle’s upper and lower trendlines after a bearish breakout. In Bitcoin’s case, the gap extends above $12,000, taking the cryptocurrency below $20,000 in the medium term.
Nevertheless, the triangle pattern also looks like a Symmetrical Triangle due to the adjustment of the lower trendline – a bullish indicator in an uptrend.