Bitcoin (BTC), after failing to surpass the critical resistance level of $30,000, which is considered a crucial point to initiate a new bull run, continues to search for direction following a drop below $26,000. The price movements surrounding Bitcoin have led some analysts to ponder the uncertain future of the largest cryptocurrency.
The Danger of a Bull Trap in Bitcoin
Prominent cryptocurrency analyst Tolberti stated that the recent price action and decline in Bitcoin on September 3 could potentially be a bull trap. The analyst highlighted that the current price chart of Bitcoin has formed a significant Head and Shoulders (H&S) pattern, which is typically indicative of a downtrend, stating:
We can see a major Head and Shoulders pattern forming on the price chart, which is an extremely bearish signal. Although this formation has not been confirmed yet as the neckline is still holding, the fact that the price is below the main blue trend line increases the likelihood of a breakout.
According to Tolberti’s expectations, this shift from an uptrend to a downtrend presents a significant opportunity for investors to take short positions in Bitcoin. The analyst also shared specific price levels that he believes could provide attractive entry points for investors and traders:
If you ask where to take profit or buy Bitcoin, I strongly recommend the 0.618 Fib retracement level (20,377 dollars) combined with the unfilled price gap on CME. This is an incredibly strong support, and it should mark the beginning of a new bull market or at least a significant bounce from here.
Bitcoin’s Preparation for a Major Bull Run
Meanwhile, Tolberti warned that Bitcoin is not yet ready for a full-fledged bull market and presented several key indicators to support the downtrend. One of the indicators he highlighted is that Bitcoin is trading below the 200-week moving average (MA), which traditionally indicates a long-term downtrend. The analyst suggested that as a result, the largest cryptocurrency could potentially drop to $10,000 and possibly reverse the downtrend around March 2024.
Additionally, Tolberti acknowledged that Bitcoin recently exhibited a impulse wave, typically considered a bearish signal, following a significant market crash. However, he added that a corrective uptrend could precede another significant decline, adding further uncertainty to Bitcoin’s future price trajectory.
It is worth noting that Bitcoin corrected to a more typical range around $26,000 after rising in the middle of last week, fueled by positive regulatory news. On August 29, Bitcoin experienced a notable 8% increase by surpassing $28,000. This increase came after a federal appeals court in the United States instructed the Securities and Exchange Commission (SEC) to review its rejection of Grayscale Investments’ request to convert its GBTC into an Exchange Traded Fund (ETF).
Crypto enthusiasts argue that the approval of a spot Bitcoin ETF by the SEC would be a significant catalyst for Bitcoin’s upward movement. This product, which will be the first of its kind in the United States, is seen as a major driver of institutional capital inflow into the broader cryptocurrency market. However, some market analysts caution that the reaction to this approval should be measured, as it may not necessarily trigger a definitive rise in Bitcoin’s price.
