Bitcoin has currently entered a stage where the bulls and the bears are vying for absolute control over the price, meaning that it could swing either way. While sentiment is still mostly bullish from here, there is still the possibility that the bears could win out and this side of the coin has prompted crypto analyst FieryTrading to map out what could happen if this ends up being the case.
In the analysis, FieryTrading identified an indicator that might point toward a bearish reversal for Bitcoin and this was the Wyckoff distribution pattern. The analyst observes that the Bitcoin price might actually be current trading within this Wyckoff distribution pattern which would not be positive for the price.
“As seen on the chart, the BC/UT/UTAD are nearly identical as on the schematic. Three higher-highs, of which the first two are sold off quickly, and the last (UTAD) took a while before it turned bearish,” Fiery Trading explains.
Furthermore, the analyst explains that the AR and SOW phases identified in the chart above are almost identical. However, there is a significant difference, which is that the Bitcoin price has already retested the AR-low between the UT and UTAD identified twice already.
In a scenario where this bearish setup plays out, the crypto analyst explains that there will end up being another retest around the SOW region in the future. If this happens and support fails to hold, allowing the price to fall through this SOW area, then I would be very bearish for the price.
The target in such a scenario would be $30,000, effectively marking the $38,400 level as the local top. “This would also mean that 38.4k is the 2023 top, with a move towards 30.000$ being fairly likely,” FieryTrading posits.
The analyst reiterates their own bullishness toward the price of Bitcoin. However, they also express that it is important to see bearish signs when they appear. “The fact that we had three higher highs which were all sold off is alarming at the very least.”
The Bitcoin price has already seen a slowdown after an impressive run-up above $38,000, which explains why some indicators have begun to turn bearish. One example of this is the decline in the trading volume which suggests that investors are not as active in the coin now as they used to.
The decline in trading volume has coincided with a drop in the market sentiment. However, the negative sentiment is still drowned out predominantly by the positive as the Crypto Fear & Greed Index still points to greed. This suggests that despite the decline in price and trading volume, investors are not selling off much of their holdings.
Bulls hold $38,000 | Source: BTCUSD on Tradingview.com
Featured image from GOBankingRates, chart from Tradingview.com