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The bitcoin price on Tuesday slipped below the psychological support level of $10,000. But according to market analyst Jacob Canfield, the asset is still inside a strong bullish bias.
The TradingView author said bitcoin’s reversal from the $11,000 level on Saturday was a sign of a bull trap. Technically, a Bull Trap is a false signal that prompts traders to act on a wrong buy signal and generates losses on the resulting long positions. Canfield, who has earlier recognized the pattern, exited his Long near the $11,000 level. Further, the pullback action prompted the analyst to target $9,800-$10,200 as potential downside targets, as shown in the chart below:
Canfield noticed a higher demand in those downside levels, indicated via a green bar. The analyst expects the bitcoin price to undergo a sharp reversal upon testing them as support. As a result, the asset would revisit the bull trap area below $11,000 from where it could either continue heading upwards and test a descending trendline on the top (indicated via red), or fall back to retest the high-demand support.
What’s Below the Demand Threshold?
On July 17 and 18, the bitcoin price was trading below the Demand bar. A strong rebound from levels below the $9,800-$10,000 range led Canfield to assume the area as Bear Trap. Just like Bull Trap, a Bear Trap is a fake signal but of downside momentum.
Canfield thinks that breaking below the $9,800-$10,000 range could push the bitcoin price to as low as $8,200, which would still be part of the Bear Trap scenario. It means the market bias will remain bullish despite the fall.
“Possible $10k gets front-run, but the demand zone is strong. Still a bull market, but a break and close of $9500 will convince me we may visit $8200-8500 zone,” tweeted Canfield.
Got my bull trap I was looking for at $11k to short
Averaging in from $10,200 down to $9800 for spot.
Possible $10k gets front run, but the demand zone is strong.
Still a bull market, but a break and close of $9500 will convince me we may visit $8200-8500 zone pic.twitter.com/NsWwuecQPs
— Jacob Canfield (@JacobCanfield) July 22, 2019
Some analysts see bitcoin way below the targets suggested by Canfield. Twitterati Crypto Kea, for instance, believes the asset would test support as low as $7,148. The analyst reached the assumption by focusing on the Mayer Multiple, a method to determine bitcoin’s long-term market sentiment: oversold, overbought, or neutral.
26/ Bitcoin´s price is very much on track to resemble the first major correction of 2017´s bull market in terms of Mayer Multiples (see full thread for details & targets). Even if we go all the way down to the bottom of the bullish channel, this is still considered a bull market. pic.twitter.com/Wit1KaQjsS
— CryptoKea (@CryptoKea) July 16, 2019
That means bitcoin is looking for another 25 percent drop from its session low of $9,960.
Fundamentals, Meanwhile
Bitcoin is stuck between two extremely opposite market sentiments. On the one hand, Treasury Secretary Steven Mnuchin called the cryptocurrency “a national security threat.” On the other, Intercontinental Exchange-backed Bakkt started testing physically-settled bitcoin futures contracts on its platform on Monday, seven months after the original schedule. While the first news affects the long-term regulatory prospects of bitcoin in the US, the second one promises to build a gateway for institutional investors to enter the cryptocurrency industry.
0/ @Bakkt plans to launch next month on December 12, and some people are hoping it kicks off another crypto bull run. Now seems like a good time for a quick discussion on:
– what Bakkt is
– why it might be exciting
– when it will get regulatory approvalThread. 👇
— Jake Chervinsky (@jchervinsky) November 6, 2018
Despite the contrast, the pendulum seems to weigh towards a bullish bitcoin market. Sam Doctor, a quantitative strategist at Fundstrat, said he is positive about more money coming into cryptocurrencies following Bakkt launch.
“We think Bakkt could be a huge catalyst for institutional participation in the crypto market,” he stated.
