- Bitcoin dips below US$30,000 but could rise higher on bargain hunting
- Strong rebound from the lower end of the Trading Envelope indicator could see Bitcoin rally to US$36,000 in line with the broader market
“Be fearful when others are greedy and be greedy when others are fearful.”
– Warren Buffett
As with so many other things in life, chasing higher highs often leads to sharper crashes.
Whether it’s drugs or adrenaline, the human race is constantly in a tussle for that next high, only to come crashing down soon after.
So when Bitcoin hit its all-time-high of around US$64,000 in mid-April, many seasoned hands (as opposed to diamond) were gearing up for a sharp correction soon after – the cryptocurrency had simply risen too high, too fast.
Like a drug high, speculators gorged on cryptocurrency fever, betting that Bitcoin could hit US$100,000, only to be disappointed as it corrected sharply soon thereafter.
Yet something curious has happened the past few days.
While Bitcoin did slip below US$30,000, in line with a broader sell-off in the general financial markets because of concerns over a resurgent delta variant of the coronavirus, it didn’t capitulate.
Instead, like an old man slipping into a warm bath, Bitcoin went below the US$30,000 level of support and hovered just below it, to keep hopes alive and to stay breathing.
If nothing else, bargain hunters started snapping up Bitcoin below US$30,000 in line with investors who bought the dip in equities yesterday.
For technicians, Bitcoin’s dip below the Trading Envelope indicator, a tool that smooths moving averages to map out higher and lower limits, the benchmark cryptocurrency has reached a key inflection point.
Depending on the appetite for risk assets, Bitcoin could rebound sharply if there should be a strong rally in financial assets in general, provided that markets grow more confident the recent setbacks from the delta variant are not insurmountable.
Key to the data coming out of fresh coronavirus infections from the delta variant are whether these cases are more serious and draw down more heavily on healthcare requirements, or are simply more transmissible, which raises longer term risks, but has lesser immediate impact.
If Bitcoin rebounds after having breached the Trading Envelope indicator, it could rally to around US$36,000 before staying at that level for a while.
Otherwise, Bitcoin could test US$25,000 and then US$20,000 based purely on technical indicators.
For now though, there is strong reason for the bull case.
While there is no shortage of bearish news, from heightened regulatory scrutiny to China’s crackdown on miners to pressure Bitcoin lower, that it hasn’t collapsed well below US$29,000 in the past 48 hours should be telling.
