Key Insights
- Bitcoin’s price has been holding itself steady lately, which is impressive so far.
- However, renowned analyst Peter Brandt believes that a drop could be incoming, considering a cup-and-handle formation on Bitcoin’s daily chart.
- Indicators show that trading volumes and momentum have been slowed down lately.
- However, as long as Bitcoin holds itself above the $95,000 and $93,000 price levels, Brandt’s prediction is unlikely to happen.
- Overall, investors must remain vigilant and always DYOR before opening any trades.
Bitcoin has been sailing above the $90,000 mark for more than a week now, to the delight of investors from all over the world.
However, Veteran trader Peter Brandt has thrown water over investor hopes with his latest prediction.
According to the renowned trader, Bitcoin is trading around a head-and-shoulders pattern that could trigger a plunge to $78,000!
While this prediction is shocking to some, it has caused debates among many others.
Here are all the details of Brandt’s insights, as well as the need for caution when it comes to navigating the market.
Is a Bearish Reversal on the Horizon?
According to Brandt in a recent tweet, Bitcoin is trading in a head-and-shoulders top pattern on the daily chart.
This pattern has historically been associated with a bearish reversal.
As it stands, it now suggests a possible drop to $78,000 if Bitcoin breaches its critical support level at the neckline.
This price level sits somewhere around $93,000-$95,000.
At the same time, Brandt emphasized that despite this gruelling prediction, the outcomes aren’t set in stone.
The pattern might fail to materialize or even evolve into a different trend altogether.
However, the current setup also shows a scenario that traders cannot afford to ignore.
Key Indicators Supporting Brandt’s Outlook
There are several key indicators in support of Brandt’s outlook.
One of these is the Average True Range (ATR), which currently shows that volatility is at a high.
This could increase the impact of price swings and make the negative effects worse.
Another is the downtrend in the Average Directional Index (ADX), which shows a weakening bullish momentum at a reading of 18.32.
In essence, market sentiment could be weakening.
These metrics show the importance of the $93,000-$95,000 support zone, where a failure to hold this level might validate Brandt’s outlook and set the stage for a deep correction.
The Bullish Counterargument
Despite the bearish warning, there might still be hope for the Bitcoin bulls.
For example, if Bitcoin maintains its price action above the $93,000-$95,000 range, the head-and-shoulders pattern could be invalidated.
Bitcoin will then hold its ground around the $98,000 mark or rally even further.
This said, the 8-day moving average could be an important price level to keep an eye out for.
Bitcoin currently trades above this price level, which means that its bullish momentum is back in action, and a break above the $100,000 price level could be imminent.
However, maintaining this price performance depends on trading volumes and strong market participation from both retail and large investors.
Through it all, the weakness of the ADX trend remains a major problem for the bulls because it shows that the current uptrend lacks strength.
Bitcoin will need to keep itself above the $95,000 level to maintain its bullish standing and avoid this plunge.
Bullish or Bearish In The Future?
Bitcoin’s next move will likely depend on how it navigates the key support and resistance levels.
If it breaks decisively below the neckline of Brandt’s head and shoulders formation at $93,000, it could invalidate all the bullish progress it has made and fall towards $78,000 as Brandt mentioned.
This move would also align with the cryptocurrency’s tendency to correct its price after major rallies.
On the other hand, Bitcoin keeping itself above $95,000 could negate Brandt’s outlook, especially if the trading volumes hold up.
Overall, Brandt’s warning serves as a reminder for traders to remain vigilant.
The drop to $78,000 is still an active threat. However, Bitcoin could also possibly cross the $100,000 mark—as long as it holds its standing above the $93,000-$95,000 range.