Bitcoin Forms Bullish Butterfly Pattern, Targets $32,000
Bitcoin (BTC), the largest cryptocurrency in the market, is currently trading sideways after showing signs of recovery in the wake of the Securities and Exchange Commission (SEC) lawsuits against Binance and Coinbase.
Although BTC managed to briefly recover the $27,000 level on Tuesday, it has failed to consolidate above it and is now stuck in a narrow range between $26,300 and $26,600 over the last 24 hours.
The question on everyone’s mind now is whether Bitcoin will be able to regain its bullish momentum or if it will test its 200-day Moving Average (MA) at $25,200 once again.
Bitcoin Pattern Points To Further Bullish Momentum
Bitcoin traders and investors have reason to be optimistic, as the cryptocurrency appears to be forming a bullish butterfly pattern. According to technical analysis expert Mags, this harmonic reversal pattern is a strong indication of further potential upward movement for Bitcoin.
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The bullish butterfly pattern is a type of harmonic reversal pattern that is often used by traders to identify potential trend changes in the markets. It is characterized by a series of price movements that form the shape of a butterfly, with a distinct “M” pattern followed by a smaller “W” pattern. The pattern is considered bullish because it suggests that the price of the asset is likely to reverse its previous downward trend and begin moving upward.
In Bitcoin’s case, the bullish butterfly pattern is signaling a potential target of around $32,500. This projection is based on the historical price movements of Bitcoin, as well as the shape and structure of the butterfly pattern itself. While no pattern is foolproof, the bullish momentum of Bitcoin in recent months lends further support to this target.
However, Bitcoin faces a potential challenge ahead, as it struggles to surpass its nearest resistance level at $27,500 and consolidate above it. If BTC fails to break through this price point, it may be vulnerable to retesting its 200-day Moving Average.
This key support level is crucial for BTC’s short-term bullish momentum, and failure to hold above it could lead to further price drops. In such a scenario, the $24,000 and $23,000 marks may become the next trading range for BTC. Currently, the bulls’ threshold in the short term is the 200-day MA, which will need to hold if BTC is to maintain its upward trend.
Short-Term BTC Liquidations Favor The Bulls
Recent data provided by ‘The King Fisher’ indicates that most Bitcoin liquidations are skewed to the upside, signaling possible upside movements in the near term for BTC.
As seen in the chart above, the majority of Bitcoin positions in the past few days have been short positions, with 87% of traders betting on a price decrease, compared to only 12% who are bullish on an upward movement.
However, this situation may not favor BTC bears in the long run, as institutional investors historically take advantage of high levels of liquidations, which could lead to what is known as a “short squeeze,” to further fuel a movement in the opposite direction.
This dynamic could potentially fuel the bullish momentum that Bitcoin needs to break through its nearest resistance and regain the $30,000 level that was lost in April.
At the time of writing, Bitcoin has a trading value of $26,600, representing a modest gain of 0.8% over the past 24 hours. Bitcoin’s market capitalization currently stands at $516 billion.
Featured image from iStock, chart from TradingView.com