Bitcoin is showing signs of continuing its uptrend despite a recent sell-off it saw after rising towards $ 18,500.
The flagship cryptocurrency’s recent downward revision was met with equally resilient buying sentiment near local lows. As a result, its price has rebounded against the dollar on multiple attempts to collapse, creating a structure that looks like a bull pennant.
Bitcoin forms an upward continuation pattern. Source: BTCUSD on TradingView.com
Bitcoin forms an upside continuation pattern. Source: BTCUSD on TradingView.com
The bullish structure
In retrospect, a bull pennant is a bullish continuation signal that forms during an asset’s uptrend. It shows that traders with a short-term risk appetite are liquidating their positions for an interim profit. In the meantime, those with a long-term appetite are preparing to fill their positions at the local level.
This will reduce the bid on the asset as a whole and result in a correction. However, when the price consolidates and forms lower highs and higher lows, it means higher accumulation sentiment among long-term traders. As a result, the asset typically breaks above the range with the upside target as high as the height of the rally before the consolidation began.
Bull Pennant example. Source: DailyFX
Bull Pennant Example. Source: DailyFX
Bitcoin meets the criteria of the aforementioned Bull Pennant Structure. The cryptocurrency gained $ 1,898 and is now consolidating sideways within a converging trend line structure. All it takes to fully confirm the pennant is to break out and soar up to $ 1,898.
With that, Bitcoin is on its way to hitting $ 20,000 (or $ 100 to $ 150 less).
Prospects of reaching $ 20,000 continue to rise on supportive fundamentals. Bitcoin received attention from global media this month, including the Financial Times, the Wall Street Journal and CNN, which covered the cryptocurrency after it rose more than 150 percent in 2020.
Even Game of Thrones actor Maisie Williams became a “BITCOINER”, which made the legendary investor Warren Buffett’s former “rat poison” even more popular.
But this time it’s different, as the Financial Times reported. Other legendary investors like Paul Tudor Jones and Stan Druckermiller bought the cryptocurrency and said they viewed it as a hedge against inflation. The “rat poison” emerges as nectar as global banks print more money to support their economies through a COVID-led recession.
“Bitcoin is trading above the trendline at a new ATH through year-end,” said Jason Williams, co-founder of Morgan Creek Digital Assets. “For a fisherman, steady progress is like perfect bait in the water. The suits see the diagrams and cannot help themselves. Addicted and in the boat. Bitcoin knows what it’s doing. ”
As of now, Bitcoin is only $ 2,000 away from its record high.