Bitcoin Slipping Below $10K is Not the End of Bull Market: Analyst

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.

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.

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.

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.