Is The Price Rise of $10,000 Bitcoin Going to Trigger a Sell-Off?
June 4, 2020
The price of Bitcoin is up nearly 25% in the month of May alone. It’s currently trading at around $9,700 USD. The recent bullish trend no doubt has purists licking their chops, sparking many to believe that Bitcoin just might be poised to reach beyond the $20,000 mark in 2020.
Given the current value is sitting at triple the March low of $3,100, those currently maintaining a bearish sentiment on this trend are eyeing a potential sell off at the $10,000 mark. So will it be the bulls or the bears that win this time?
Indicators Show a Sell-Off Might Be Near
Fibonacci indicators are currently expressing that surpassing the next key bullish level at $11,800 is likely what it takes to get the price of Bitcoin all the way to $13,700. That’s a nearly 40% jump from where the price is now and would represent a 450%-plus increase from the low in March.
Even for the most bullish of Bitcoin investors in a market as volatile as cryptocurrency, it’s hard to fathom that the price will move up that quickly without some sort of a steep downturn being imminent. Based on pricing psychology alone, it might be a much better bet to assume the price will go down in short order.
The MACD indicator is a measure of moving average convergence and divergence. It gives traders and long-term investors alike an indication of the relationship between two moving averages and ultimately provides insight into how strongly momentum is moving and in which direction. As with any indicator, the stronger a long-term trend appears to be, the more likely it is to lead to a certain outcome. There is no such thing as a perfect indicator and there is always a certain degree of risk involved in trying to predict what will happen next.
With the price going up the way it is right now, the current divergence is expressing a bearish trend. This not only means the price of Bitcoin might drop; it may dip down as low as $7,400. That’s because in trading, a high volume of traders pushing beyond a certain limit turn that limit to support on the way down. For now, $7,400 is likely the support line at the moment. Bitcoin merchants and traders should watch for a move below $8,600 on the way down.
What Needs to Happen to Get the Price of Bitcoin to $13,700?
In order for the Bitcoin price to move up another 30% to 40%, it’ll mean that some more institutional money is coming in and those that got in at $3,100 are inclined to keep riding the wave rather than taking profits. Although in more traditional equities markets a 30% to 40% swing within a week is unlikely, stranger things have happened in the world of Bitcoin.
Still, the idea that the price will continually run up as traders and investors continue to hope for a new all-time high for Bitcoin is more than just a bit far-fetched. For now, it’s out of the question. Instead, expect a high number of investors to take some profits should the price go beyond $10,000.
Breaking $13,700 and moving beyond that to $15,000 or even $20,000 is an astronomical expectation at the moment. Markets tend to price in events before they happen, so the idea that the Bitcoin halving will lead to just a temporary retracement and then a shot to the moon above the $20,000 mark is a little bit too ambitious right now.
So What Should Investors Do Right Now?
No matter what the asset class is or how volatile the broader global market is, the advice on whether to buy or sell always goes a little bit something like this. It’s important that one never risks more than they can afford to lose. It’s also crucial to keep in mind that history doesn’t always indicate future results, and that diversifying one’s portfolio is key to long-term success.
Remember: even when halving events come and go and pandemic curves flatten, no one truly knows where the markets will go next. When it comes to investing, the best offense is a good defense.
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