Bitcoin price prediction: BTC to $20,000 looks obvious: But is it?

There is a growing consensus the Bitcoin price is in for a 30% drop. But the more people expect it, the less likely it is to happen.

Bitcoin is trading at $31,600, down $188.00 (-0.59%).

It’s been a relatively quiet weekend by Bitcoin’s standards. But to be fair, it’s been a relatively quiet two months by Bitcoin’s standards.

BTC closed out the working week at its lowest closing level in six months on Friday, as traders contemplated the unlocking of 16,240 BTC worth of Grayscale Bitcoin Trust (GBTC) shares. The threat of a large tranche of BTC available for sale has cast a shadow on an already struggling market.

Despite BTC’s inertia, its dominance is once again approaching 50% of the cryptocurrency market. Although, unfortunately, this signals a broader capital flight from the crypto space and should not be considered a positive.

The recent poor Bitcoin price performance has led to many commentators (myself included) to read BTC its last rites, predicting BTC may soon be on its way lower, much lower.

DoubleLine Capital’s billionaire founder Jeff Gundlach, who famously missed out on $40,000 when, on the way up, turned neutral on BTC at $23,000, thinks he may get another bite of the cherry.

“The chart on bitcoin looks pretty scary….I have a feeling you’re going to be able to buy it below $23,000 again. Bitcoin has really lost its steam.”

But as bad as it looks, and as negative as the commentary is, trading the consensus is not always a sure-fire winner.

Just as the market becomes most bullish at the top, the reverse is often true.

And the more people that come round to my view, the less conviction I have. The mechanics of a market often don’t serve the needs of the many. Think about it for a moment. When everybody buys and holds long positions, the only direction for the market to go is down.

And when everybody has sold, and there is no selling left, only buy orders affect the price.

Now, this is not to say that the Bitcoin price can’t go lower. It can. And if BTC breaks $28,700, Algos, systematic traders and stop-loss orders will cause a sharp shock lower. However, I’m not convinced it will stay down for long.

And whilst everybody has highlighted the clear head and shoulders pattern on the chart, if trading were that simple, I would have a lot more hair and more money.

BTC Technical Outlook

The daily chart shows BTC has formed a textbook head and shoulders pattern. Currently, BTC is in the process of returning to the ‘neckline’ at $28,700, and clearly, this is a significant development.

As I mentioned, If the Bitcoin price fails to hold this horizontal support, it will likely see selling. The obvious technical target is just below $20,000, where support is seen at the November 2020 high.

However, this is what I think could happen. If BTC breaches support, the whole world will aim for $20,000. Not only will longs stop out, but the systems and speculators will go short. And if BTC doesn’t achieve the $20,000 target, the shorts will panic.

If the price fails to perform as predicted, the shorts will up their $20,000 take-profit target. And if the price continues higher, so will the buy limits. Furthermore, if BTC recovers $27,800, take-profit limits will transform into stop-loss orders. And when that happens, the pain trade is higher.

Of course, this is just speculation (but isn’t it always?). However, should BTC trade below $28,700, it will be interesting to see what happens. My experience tells me that what the crowd wants is quite often the opposite of what it gets.

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Bitcoin price chart (Daily)

Bitcoin price prediction

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