EghtesadOnline: Crypto analysts believe Bitcoin price is set for a near-term rally as a key technical pattern points toward $9,800.
The price of Bitcoin (BTC) dropped to as low as $9,100 on May 15 following a strong rejection at $9,900. In the short-term, traders still anticipate another upsurge to the $10,000 area, or at least to the $9,800 resistance level.
Bitcoin at a critical point that may decide its trend in Q3 2020
Top traders expect the price of Bitcoin to surge to $9,800 after the price demonstrated a classic technical pattern known as a falling wedge breakout.
In the last 36 hours, the Bitcoin price slid downward from $9,970 to $9,100, with barely any attempt of a significant recovery. That led Bitcoin to consolidate under a descending trendline with relatively low volume.
But on May 16, the price of Bitcoin recorded its first clean breakout since a local peak above $9,900 was achieved on May 14. The rebound of BTC from a key support area at $9,200 created a strong foundation for Bitcoin to lead a near-term upsurge to higher resistance levels.
Whether the price of Bitcoin will see a continuation of an uptrend above $10,000 in the near-term is another question. Even if BTC climbs to $9,800, there are two scenarios that make a bearish and a bullish trend equally likely.
The bearish and bullish scenarios for BTC
If the price of Bitcoin rises to $9,800 and rejects in a similar manner as it did when it fell steeply from $9,970, it leaves BTC vulnerable to three consecutive lower highs at a high time frame.
Simply put, subsequent to the rejections of $10,085 and $9,970, a breakdown at $9,800 would indicate three rejections of a multi-year resistance area within a short period of time.
A brutal rejection of Bitcoin at $9,800 would open it up to a sizable pullback in the near-term. Heavy support levels are found at $6,800, $7,100, $7,700 and $8,100, which serve as potential areas of correction.
The most optimistic scenario would see Bitcoin reclaim $9,800 and a powerful rally above $10,000. Such a move would print historically accurate technical formations like a cup and handle pattern that may spark a new prolonged rally.
A consistent increase of Bitcoin withdrawals from exchanges may bolster the bullish scenario of BTC over the medium-term.
Data from glassnode and crypto trader Ceteris Paribus shows that exchange balances are down by around $3 billion since BTC dropped to $3,600 on March 13.
On-chain data indicates that fewer users and investors are compelled to sell BTC at current prices, making the likelihood of an extended Bitcoin rally increase despite its 160% price spike within the last two months.