Bitcoin price hovers above the $10,000, looking for direction as the President of the United States (POTUS) and the First Lady are treated from COVID-19. As an element of risk, Bitcoin reflects the sentiment in the market and traded positively correlated with the stock market in 2020.
The recent price action above the $10,000 resembles a triangular pattern. Because the market dropped from $12,000 all the way to $10,000, the bias is that the triangle will act as a continuation pattern.
ECB Announces Plans for a Digital Euro
Last week marked an important event in the crypto space. For the first time, a central bank announced plans for a digital currency. The European Central Bank (ECB) announced that it applied for the “digital Euro” trademark and that it steps up the preparation for the digital currency.
For the current crypto assets, this represents a terrible threat to their existence. For all the fuss in the crypto space, the adoption from the general public still fell behind the initial hype, and many are in the market for speculation purposes only. However, given longer and longer consolidation periods on the Bitcoin market, that influence the ranges on other crypto markets too, the interest is at risk of dissipating even further.
A central bank of the ECB’s caliber will introduce a digital currency backed by regulation – another blow to the current crypto space. Lack of regulation in the industry has long been one of the reasons why investors avoided the crypto market. Therefore, a project like the one prepared by the ECB may change that.
Bearish Contracting Triangle
The technical picture reveals a possible bearish contracting triangle. In such a triangle, the e-wave usually pierces the a-c trendline before breaking in the opposite direction. Therefore, bears would want to wait for the Bitcoin price to reach $11,000 before going short for a move to $9,000. For such a trade, the invalidation level sits at $12,000.