Bitcoin price continues to consolidate above $30,000, but the sentiment remains bearish. Every bounce is shallower and unable to break the previous lower higher. Thus, a break below the $30,000 level spells trouble for the price for Bitcoin, as bears would likely target the measured move of a descending triangle.
The cryptocurrency market follows the path shown by Bitcoin, in the sense that the interest in digital assets declined significantly. If Bitcoin price breaks below $30,000, the measured move of the descending triangle points to $20,000, likely triggering similar breaks in other cryptocurrencies.
The decline in the price of Bitcoin is even more surprising considering the rise in US inflation. To many, Bitcoin was viewed as a hedge against inflation. Yet, inflation in the United States has reached 5.4% annualized, while Bitcoin lost half its value. Gold proved to be a better hedge against inflation, even though it is down on the year, but not that much as Bitcoin.
Bitcoin Price Technical Analysis
A descending triangle is a continuation pattern. The price pushes against horizontal support while unable to make a new higher low.
But a bearish breakout is not warranted. The problem with the pattern is its time length.
More precisely, it took too much for the price to consolidate, and so the horizontal support became visible to everyone. Very often in technical analysis, when a pattern is too obvious, the market price action would rather invalidate it.
In any case, the bias is bearish for the price of Bitcoin, and a daily close below $30,000 spells further trouble ahead. Bears may want to wait for such a close before selling short with a stop-loss order at 35,000. The target may be set at $20,000 following the measured move indication or by using a risk-reward ratio of 1:3, for more aggressive traders.
Bitcoin Price Forecast
Follow Mircea on Twitter.