In a sudden burst of strength, Bitcoin rose as high as $ 36,500 this morning. However, analysts are warning of a drop to $ 20K.
Previously, the benchmark cryptocurrency cut its previous gains above $ 34,000 and fell as much as 6.83 percent to trade on an intraday low of $ 31,990. BTC added over 18 percent to its rating after falling below $ 30,500 in previous sessions.
But higher selling pressures in the $ 34,000-36,000 range limited the upside and left the price in a choppy range.
As it stands, Bitcoin started making a series of lower highs after hitting a record high near $ 42,000 on Jan. 8. Meanwhile, stronger buying sentiment in the $ 30,000-31,000 range served as support.
The entire trading area appeared like a descending triangle, a bearish reversal / continuation pattern viewed by professional traders.
On Friday at midnight, Bitcoin retested the upper trendline of the triangle for a breakout but failed. A pullback ensued and the price fell back – to retest the channel’s lower trendline. The chances of this continued to rise, and CryptoQuant CEO Ki-Young Ju also published a bearish on-chain signal.
The blockchain analyst noticed a spike in the so-called „Exchange Whale Ratio“, which represents the top 10 Bitcoin transactions divided by the total inflows. If the ratio stays below 85 percent, it signals a bull market.
Conversely, a value above 85 percent warns of a bearish attack.
On Friday, the Exchange Whale Ratio hit its eight-month high, leading Ju to say that „BTC could have a big red candle if the price falls.“
“It should be less than 85% for this bull run to be legitimate. Otherwise, it’s likely a bull trap, ”said Ju.
The $ 20K price target
Bitcoin’s descending triangle pattern suggests a deeper price decline as the price breaks below its support level.
Technically, an asset should fall the maximum distance between the triangle’s top and bottom trendlines after a bearish breakout. In the case of Bitcoin, the gap extends over $ 12,000, which brings the cryptocurrency below $ 20,000 in the medium term.
Nonetheless, by adjusting the lower trendline, the triangle pattern also looks like a symmetrical triangle – a bullish indicator in an uptrend.