Bitcoin is showing signs of continuing its bullish momentum despite a recent sell-off it experienced after climbing to USD 18,500.
The latest downward correction from the cryptocurrency’s flagship has found similar resistive buying sentiment near local lows. As a result, the price has rebounded against the dollar after multiple failures, creating a structure similar to a Bull Pennant.
Bitcoin forms an upside continuation pattern. Source: BTCUSD on TradingView.com
The bullish structure
In retrospect, a Bull Pennant is a bullish continuation signal that forms during the uptrend of an asset. It shows that traders with a short term risk appetite are liquidating their positions for an interim profit. Meanwhile, those with a long-lasting appetite are preparing to reload their positions at local support levels.
That generally lowers the bid on the asset, causing a correction. But as the price consolidates and forms lower highs and higher lows, it represents higher accumulation of sentiment of the long-term traders. As a result, the asset typically breaks out of range, with an upward price target as high as the height of the rally before consolidation began.
Bull Pennant Example. Source: DailyFX
Bitcoin meets the criteria of the said Bull Pennant structure. The cryptocurrency gained $ 1,898 and is now consolidating sideways within a converging trendline structure. All it takes to fully confirm the Pennant is to break out and take off by a whopping $ 1,898.
That puts Bitcoin on track to hit $ 20,000 (or levels $ 100-150 before it).
The outlook to hit USD 20,000 continues to rise due to supportive fundamentals. Bitcoin received attention from global media this month, with the Financial Times, the Wall Street Journal and CNN reporting the cryptocurrency after it rose more than 150 percent in 2020.
Even Game of Thrones actor Maisie Williams became a “BITCOINER,” adding even more popularity to the earlier called “A Rat Poison” by legendary investor Warren Buffett.
But this time it is different, like Financial Times reported. Other legendary investors such as Paul Tudor Jones and Stan Druckenmiller bought the cryptocurrencyand stated that they see it as a hedge against inflation. The ‘rat poison’ is emerging as nectar as global banks are printing more money to help their economies through a COVID-led recession.
“Bitcoin is rolling above the trend line towards a new ATH by the end of the year,” said Jason Williams, co-founder of Morgan Creek Digital Assets. “The steady progress is like a perfect bait in the water for an angler. The suits see the graphs and cannot do anything about it. Addicted and in the boat. Bitcoin knows what it does. “
As of now, Bitcoin is just $ 2,000 from reaching its all-time high.