PremiumNEW DELHI: Bitcoin has been on a three-day winning run, gaining nearly 10% since Tuesday's sell-off. Experts, however, believe that the crypto market is still not out of the woods and the world’s biggest cryptocurrency could again hit the $20,000 level.
Bitcoin traded 1.2% higher at $33,911 at around 4pm IST, moving in a wide range of $33,300.36-35,566.50 during the past 24 hours, as per CoinGecko.com.
According to experts, investors must keep in mind that Bitcoin has a long way to go before it can hit a fresh all-time high. The digital asset is 47% away from its all-time high of $64,805, hit on 14 April, 2021.
Fear, uncertainty and doubt has taken over the crypto market amid regulatory crackdown in some countries and concerns over environmental impact of Bitcoin mining.
For a few weeks now, the bears have been claiming that Bitcoin is in a massive header and shoulders pattern formation. This is a price reversal pattern that helps investors identify when a reversal may be underway after a trend has exhausted itself.
According to Kraken Research, Bitcoin’s bounce from $30,000 to $42,000 in January marked the "left shoulder" (see chart). The subsequent push through $42,000, the climb to an all-time high of $65,000, and plunge back below $42,000 represented the "head".
“The latest bounce from $30,000 to $42,000 and back to $30,000 makes the "the right shoulder." Because the head & shoulders chart pattern is widely regarded as a bearish reversal pattern, many think that an eventual move back down through $30,000 will transpire into bitcoin plunging deeper into the crypto abyss. With $20,000 being the previous market cycle top, most bears have not ruled out a return to said historically significant level," Kraken Research said in a note.
After bouncing back from the support of $30,000 earlier this week, investors started wondering whether the head & shoulders pattern became invalid.
“With Bitcoin down more than 50% from its all-time high, others see the asset’s return to the $30,000-$42,000 range as merely a mean version back down to consolidation that will set the stage for bitcoin trending higher later this year. Although no one knows what the future holds, the longer Bitcoin traverses inside the $30,000-42,000 range, the weaker the odds of the head & shoulders chart pattern playing out like the bears are hoping," the note added.
Bitcoin has been trading in the $30,000-42,000 range since 19 May 2021.
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