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Crypto currency analyst Josh Olszewicz reported that Bitcoin (BTC) reaching new record levels above $70,000 was accompanied by a significant technical formation known as the rising wedge, which indicates a potential pullback in the price of the largest crypto currency. The analyst issued a short-term bearish warning for Bitcoin due to the formation.
Short-Term Decline Warning
The rising wedge formation, created by the convergence of upward sloping trend lines at a single point, is typically resolved with a bearish outcome in technical analysis. Despite Bitcoin’s rapid rise from $60,000 in less than two weeks, Olszewicz expects a typical bull market pullback.
Explaining the dynamics of the rising wedge formation, Olszewicz noted that the converging trend lines indicate a gradual weakening of the upward momentum, eventually leading to a break below the trend line connecting the lows, signaling a bearish development and potentially deeper losses. Additionally, indicators such as the 10-day rate of change diverging from rising prices suggest a downward momentum, often preceding price pullbacks.
Historically, significant pullbacks of 20% or more were common in past bull markets, including those in 2017 and 2020-2021. However, Olszewicz added that factors such as entries into spot ETFs in the US and continued BTC purchases by institutions like MicroStrategy led by Michael Saylor support Bitcoin’s long-term upward trajectory, suggesting any potential pullback would be short-lived. The analyst believes that despite the possibility of a rising wedge formation break and temporary pullback, bears will find it difficult to maintain downward pressure on BTC‘s price.
The analyst’s perspective reflects the overall investor approach in the crypto currency market, where investors closely follow technical formations and indicators to gauge potential price movements. Bitcoin’s recent rally has caught the attention of both individual and institutional investors worldwide, and the growing interest in crypto-related investment products such as spot ETFs has contributed to significant changes in market dynamics.
Following Bitcoin’s breach of the key resistance level around $69,000 and entering the price discovery phase, market participants remain alert to potential changes in momentum and price direction. Current data shows Bitcoin trading at $73,428, up 0.65% in the last 24 hours.
While short-term sharp price movements are common in the highly volatile crypto currency market, many analysts maintain a bullish outlook on Bitcoin in the long run. The continued adoption of crypto currencies by mainstream financial institutions and the wider acceptance of Blockchain technology continue to fuel optimism among crypto enthusiasts.
