Benzinga - by Shanthi Rexaline, Benzinga Editor.
Bitcoin (CRYPTO: BTC) has been on a downward trajectory since its peak in mid-March, with the decline accelerating in late April. Crypto skeptic and economist Peter Schiff believes the sell-off could continue.
Technical Analysis: On Wednesday, Schiff shared a short-term candlestick chart of Bitcoin on X (formerly Twitter), highlighting a technical pattern suggesting a potential bearish trend.
He pointed out that the previous support level of $60,000 is now acting as resistance. Additionally, he identified a possible “head-and-shoulders” pattern forming under $60,000, with a neckline around $57,000. This pattern, if confirmed, could indicate a bearish reversal.
“The downside objective is $54K,” he posted.
Notice on this shorter-term #Bitcoin chart that $60K, which was support has become resistance. Bitcoin is forming a short-term, head-and-shoulders top, with the head just under $60K, the shoulders around $58.5K and the neckline just below $57K. The downside objective is $54K. pic.twitter.com/fkDHBSmyq2— Peter Schiff (@PeterSchiff) May 2, 2024
Understanding Head-And-Shoulders: A head-and-shoulders pattern is a technical indicator used to identify potential trend reversals. It consists of three peaks: a middle peak (the “head”) that is higher than the two outer peaks (the “shoulders”). A confirmed head-and-shoulders pattern suggests that an upward trend is nearing its end and a downward trend may begin.
Why It Matters: Bitcoin enjoyed a significant rally following the approval of spot Bitcoin ETFs in late 2021. After a period of consolidation, the price surged to an all-time high of $73,750.07 on March 14th. Since then, it has been in a broad consolidation phase, with a recent downward trend emerging.
Federal Reserve Decision: On Wednesday, the Federal Reserve’s decision to maintain interest rates impacted Bitcoin’s price. The pause in rate hikes strengthened the U.S. dollar, which weakened Bitcoin as it is denominated in dollars. Conversely, future signs of potential rate cuts by the Federal Reserve could translate to Bitcoin gaining strength.
Diverging Opinions: While detractors like Schiff take a bearish stance on Bitcoin’s short-term outlook, proponents remain optimistic. Ark Investment Management CEO Cathie Wood predicts a long-term price surge, with Bitcoin potentially reaching $3.8 million by 2030.
In the face of this uncertainty, some analysts, like Ali Martinez, see an opportunity to buy the current dip.
The last three times the #Bitcoin 30-day MVRV dropped below -9% in the last two years, the price of $BTC surged by 64%, 63%, and 99%, respectively.Using the market-value to realized-value ratio — MVRV, an on-chain indicator to study aggregate investor behaviors as price moves to/from their cost basis, he said the 30-day MVRV was at a negative 11.6%.The #BTC 30-day MVRV is currently at -11.6%, suggesting it may be time to buy the dip! pic.twitter.com/Q85skH7Hyj
— Ali (@ali_charts) May 1, 2024
“The last three times the #Bitcoin 30-day MVRV dropped below -9% in the last two years, the price of $BTC surged by 64%, 63%, and 99%, respectively,” he noted.
Price Action: Bitcoin was trading 4% down at $57,630 at around 3 am ET, according to data from Benzinga Pro.
Read Next: Bitcoin Tops Returns In All Asset Classes Amid ‘Repeatedly Disappointing Inflation Data’: Mohamed El-Erian Shares Insights On Market Volatility
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