Short Term Price Analysis: Can Bitcoin Hold Support at $3,500?

Last week’s price increase occurred as Bitcoin bounced off the 200-week moving average which also coincided with upward sloping support. Currently, a potential bull flag pattern is forming due to consolidation after the recent price increase. If a bull flag pattern were to play out and Bitcoin broke above 3.6k, those circumstances would likely create a short term price target of roughly 3.9k. This target also aligns with the 0.382 Fibonacci resistance level.

Bitcoin is now trading in the range between the 0.618 and 0.5 Fibonacci level. If the 100 and 150-week moving averages converge into a cross, that would be an additional bearish indicator for Bitcoin in the short term. Any sharp decline would send Bitcoin below the 0.618 Fibonacci support level indicating further bearish momentum. While these circumstances could send Bitcoin downward to retest yearly lows, the bulls are still holding strong at 3.5k.

If price breaks above the center triangle, Bitcoin may be able to gain more buying momentum in the short term and ultimately lead the bulls higher into the 3.9k range for one last push. Volume has decreased and bearish momentum is dying down for now. However, if the bulls fail to break to the upside and Bitcoin retests 3.3k or even yearly lows, this price action would create a continuation of the descending triangle formation which would be characteristic of the weekly macro trend. This is a deadly pattern that Bitcoin must avoid in order to find a bottom.

From a macro perspective, many investors are still hopeful that a Bitcoin ETF will be approved in 2019. Recent events have demonstrated that Bitcoin and the cryptocurrency market may be more immature than previously assumed. Earlier in February, the CEO of QuadrigaCX Cryptocurrency Exchange supposedly died while having sole access to 190m dollars worth of customer funds. To make matters worse, the exchange continued to accept deposits for over a month after his death, making users even more suspicious of fraud. Regardless of whether the CEO legitimately died or faked his death, one person cannot be responsible for securing all customer funds.

If no regulatory measure is taken to prevent these kinds of scenarios from happening it would be irresponsible for the SEC to approve a Bitcoin ETF. After dropping 80%, a large portion of individuals outside the space believe Bitcoin has no fundamental value and will eventually go to zero. For these reasons, it may be hard for the SEC to justify the approval of a Bitcoin ETF in 2019 or even 2020. Although it is likely inevitable that a Bitcoin ETF will be approved, it may take years for the space to develop reliable custodial solutions before an ETF can be implemented.

Disclaimer: Charts are from tradingview.com. I am not a financial advisor. This is not financial advice. Please do your research independently and make objective decisions. This article is intended to educate readers on the recent state of the cryptocurrency market. The author of the article trades cryptocurrency.