Is $10k Bitcoin’s Next Target?

Within the landscape of trading and investing it is always essential to explore why your hypothesis may be incorrect. Take into consideration the opinions of those who disagree with you. Confirmation bias is one of most common mistakes traders and investors tend to overlook. Above all, the singular approach is to forge predictions based on probabilities, not possibilities.

So what is probable for bitcoin in the near term future? As of now, it appears that bitcoin has bottomed at around $5,800 and as long as bitcoin remains above $6,000 the odds of a further decrease are unlikely. One possible reason bitcoin went long at $6,200 was because the price hit a critical Fibonacci retracement level of 61.8%, which probabilistically results in a price increase. Fortunately this prediction was correct and bitcoin soon increased to around $7,700. Currently, this breakout point of around $7,300, which was formerly resistance, should now act as support for a potential pullback.

The blue line on the chart above represents the 21 monthly average. It is a very promising signal to see that bitcoin has held this support level and bounced from it.

In addition, bitcoin experienced a false breakout signal earlier in June. According to DailyFX.com, a false breakout “is when price temporarily moves above or below a key support or resistance level, but then later retreats back to the same side as it started.” In June, when bitcoin decreased below February lows, it quickly rebounded and held the critical support level of $6,000. This is an example of a bitcoin false breakout signal. This evidence is a significant indicator that bitcoin has possibly bottomed, and there are bullish signals moving forward.

Another reason for a future BTC price increase is derived from the CBOE CoT report. On July 17th, the report indicated that there was 4,135 short orders and only 2,495 long orders (BTC). This was right before last week’s rally occurred. The majority of noncommercials are net short on bitcoin. Therefore, traders still carry a bearish sentiment. Overall, there are still too many bears in the market that are likely to be shaken out as they continue to get short squeezed.

But more importantly, is it possible this perspective is wrong? Many of the mainstream media outlets are claiming that bitcoin still has not bottomed. For example, the CEO of Bitmex, Arthur Hayes, is still skeptical to whether bitcoin has bottomed. In an email to CNBC, Hayes confirmed,

“I think the current rally will top out close to, but not greater than $10,000. Then we will fall and test $5,000. If that holds then we can rally to $50,000 by year end.”

Many of the bears are making the claim that we have not seen the bottom because we are currently experiencing another bear trap. This is a plausible statement and it is possible this outcome may occur. However, currently the probability is more likely to rise than to reverse and collapse back below previous lows.

Nevertheless, it is essential to examine alternative perspectives. Some of the evidence against a price increase is somewhat compelling. We are still below major resistance levels including the 100 EMA (Exponential Moving Average), 200 Simple Moving Average, and previous highs and resistance levels at 8K and 10K. Those who claim bitcoin will go lower have a valid point, and a break of the critical support level of $6,800 would indicate a warning signal that a heavy storm may be approaching. That being said, bitcoin’s next target could also be 10K.

Image source from Alessio Rastani available at https://www.youtube.com/watch?v=JMV90LG7jx4&t=485s&ab_channel=AlessioRastani

Disclaimer: This is not financial advice. Please do your own research and make objective decisions. Please do your own due diligence. This article is intended to educate readers about the potential short term price action of bitcoin. The author of the article owns cryptocurrency.