Bitcoin BTC
The Bitcoin price is crashing today as investors rush to take profit after it reached its all-time high of $64,945. The BTC has dropped by more than 5% from this high and is currently trading at $61,300. Its market cap is at more than $1.16 trillion.
What happened: Bitcoin has been in a strong rally this week. This performance was mostly because of the mainstreaming of digital currencies as Coinbase went public. Also, there are signs that demand for the digital currency has risen in the past few months.
However, after surging to an all-time high, BTC price has struggled. This is in line with what I predicted on Wednesday. In my article, I forecasted that the price would retreat because of the buy the rumour, sell the news situation. This is where investors buy an asset ahead of a key event and then exit it after the event happens. We also saw the situation this week when the US dollar declined after the strong US inflation numbers.
Why it matters: If you have followed Bitcoin price in the past, this price action is nothing new. In the past, the currency tends to struggle slightly below a key resistance like $65,000, $60,000, and $55,000. This happens mostly because of profit-taking since many traders place take-profits at these levels. Also, BTC rallies tend to pause after making a strong rally. So, how will the Bitcoin price trade during the weekend?
If you follow Bitcoin, you know that significant market actions usually happens during the weekend. Furthermore, the stock and forex market never trades during this period. Looking at the daily chart, we see that the Bitcoin price has formed a rising wedge pattern that is shown in black.
In technical analysis, this is usually a bearish signal, as my colleague noted yesterday. This wedge is nearing its level of confluence. Therefore, in the near term, we should not rule out a major decline of the BTC prices. The question is, will this action happen during this weekend? Probably not but it could happen next week.
