Bitcoin Volatility Incoming as BTC Price Forms This Key Technical Pattern – $38K or $48K Next?
Bitcoin (BTC) chart analysis suggests the price has formed a key short-term technical pattern that could be a harbinger of extreme volatility ahead, with quick dump to $38,000 or pump towards $48,000 possible depending on how the pattern is broken.
Amid its consolidating back from the year-to-date highs near $45,000 it hit earlier this month, the BTC price has formed a pennant structure, characterized by the price being gradually squeezed by higher lows and lower highs.
These patterns often form in periods of market consolidation (like we have seen over the course of the past week) and usually proceed a meaningful breakout to the upside of downside.
If BTC was to break its pennant structure to the downside, which would also mark a break below its 21DMA, a quick test of the $40,000 level would be very likely due to technical selling.
A retest of $38,000 would also be very likely, given that many Bitcoin bulls may be reluctant to dip buy until they saw the $38,000 level (where the 50DMA also resides) tested and confirmed as support.
Conversely, if BTC was to break to the upside of its recent pennant, a fast bounce to the yearly highs near $45,000 would be in order and bulls would probably once again start pushing for a retest of the 2022 highs above $48,000.
Bitcoin’s powerful near-70% rally from its October lows has primarily been driven by 1) anticipation that spot Bitcoin ETFs will gain approval in the US soon, driving institutional demand and 2) amid easing macro conditions as traders up theirs bets that a Fed rate cutting cycle will begin in early 2024.
But some are now arguing that spot Bitcoin ETF optimism is now priced (i.e. analysts at JP Morgan) and with approvals still a few weeks away, the market may struggle to find
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