Major bitcoin food stalls
- Bitcoin fell nearly 5.5 percent on Monday after hitting a record high in the previous session.
- The one-day drop is the biggest since Feb 10, and suggests a longer drop over the day as the European session matures.
- Long-term sentiment remains optimistic amid increasing corporate acceptance of the US dollar’s depreciation.
Bitcoin (BTC / USD) sold heavily during Monday’s Asian and early European session, after hitting a new record high of $ 58,367 in the previous session.
The flagship cryptocurrency fell as much as 5.5 percent after the opening bell in London and flirted with short-term tech support near $ 55,550 for a prolonged bearish breakout. BTC / USD is aiming for USD 52,000 to USD 54,000 as its next downside target.
From a broader perspective, the pair appeared to have tested an upward sloping trendline that serves as the price floor for a rising wedge pattern. Technically, taking a lower pause can cause the Bitcoin price to drop by up to the maximum height of the wedge (which is around $ 10,000 long).
The cryptocurrency is now at a correction rate of 45,000 US dollars – about 20 percent less than the last high.
Bitcoin’s rising wedge pattern suggests a 20 percent correction. Source: BTCUSD on TradingView.com Bitcoin’s rising wedge pattern suggests a 20 percent correction. Source: BTCUSD on TradingView.com
Yet…
… Rising wedges previously failed while Bitcoin’s short-term bias was determined.
There is a massive possibility that Bitcoin could find support above $ 50,000 before resuming its upward momentum. The reason remains corporate / institutional takeover against the long-term risks posed by inflation and fiat devaluation.
Tesla, MicroStrategy, Square, Stone Ridge Holdings, and many other companies have combined their balance sheets by billions of dollars in the past few months.
This is not a bear market, just a healthy market reset and actually pretty organic for the continued growth of #crypto markets.
– Michaël van de Poppe (@CryptoMichNL), February 22, 2021
Crypto economist Ben Lilly noted in his latest report that Bitcoin accumulation among Wall Street firms exceeded the supply of the cryptocurrency. This resulted in a liquidity crisis that persisted due to higher BTC forex withdrawals and increased retail demand.
Mr Lilly added that investors have entered the Bitcoin market to escape the falling US dollar market. He also noted that these investors would not have to sell the cryptocurrency to generate their profits. Instead, they would back up their BTC holdings through decentralized financial services to generate returns.
“That way, investors can potentially avoid capital gains tax on their Bitcoin while enjoying the price increase,” Lilly said. “And when Bitcoin has six digits, the question arises.”
