Over the past week, Bitcoin has done surprisingly well, rallying from the $6,100 price seen last Sunday to a weekly high of $7,200, outperforming a majority of assets. Unfortunately, analysts are warning of a breakdown to pre-recovery levels.
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Could Bitcoin Drop 20%?
There’s no doubt Bitcoin has done well over the past few weeks, rallying from the lows at $3,700 to the recent high of $7,200 as aforementioned.
According to Nik Patel — an analyst and the author of the crypto trading bible, “An Altcoin Trader’s Handbook” — however, a weekly close under $7,000 will likely lead to a retracement to $5,680, which would be a 20% drop from $7,000.
Patel’s chart indicates that $7,000 was the weekly high seen last week, making it important from a technical analysis perspective.
Close this Weekly below 7000 and I'd expect to see 5680.$BTC pic.twitter.com/17fGXQm35p
— Nik Patel (@cointradernik) April 4, 2020
A close under $7,000 seems likely; just hours before the weekly candle is set to close, Bitcoin saw a rejection at $6,900, falling back to $6,700.
Related Reading: Crypto Tidbits: Bitcoin At $7,000, FATF Regulation, Coinbase Backs Ethereum DeFi
Long-Term Outlook Forming Bullish
Although there are these signs of downside in the short term, many are growing convinced that the long-term outlook for Bitcoin is anything but bearish.
Case in point, Anthony Pompliano of Morgan Creek Digital recently identified two fundamental trends that will act as “rocket fuel” for the rocket that is BTC’s price:
- Central banks and printing money like there is no tomorrow: In a bid to prevent societal turmoil and an economic depression resulting from the coronavirus outbreak, central banks and governments have begun to enact emergency measures, handing out free money to consumers, cutting interest rates to promote spending, and injecting trillions of dollars worth of liquidity into the bond markets to keep the economy running.
- Bitcoin’s halving is nearing: In just over a month from today, the number of BTC mined each day will get cut in half due to the so-called “halving.” This will make the cryptocurrency more scarce than gold and fiat, assuming a 2 percent annual inflation rate and a 2 percent annual growth of the physical stock of gold.
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