Is there a chance that Bitcoin’s price may rise? Will the bulls seize control and back the relief rally with volume, or will it just be another feeble bounce?
Low time frames are exhibiting signals of optimism with the formation of a double bottom, also known as a W-pattern. In our show today, Sheldon and Ran looked at the current market conditions to see if this is a good time to buy or if we should wait for more confirmation.
- Market outlook
- Bitcoin price prediction
- LUNA plummets as a result of the DeFi fiasco
What is the state of the market?
At the moment, Bitcoin remains indecisive, with no substantial price movement, and the pressing question is: what event will send us back into an uptrend?
A bullish response is what we’re looking for right now, with the $42k resistance level being the next critical level to break through and establish above. That will be the confirmation that the bulls have actually taken control, and the bull market is still alive and well.
Surprisingly, when the market becomes boring, as it is now, and retail investors lose interest, the most unforeseen major swings occur, implying that another is on the way.
Technically, Bitcoin formed a double bottom on shorter time frames, resulting in the price reclaiming a higher high and then retesting. This formed a higher low and, in the process, turned resistance into support.
However, there is enormous purchasing power in the $33k region, and if the next Bitcoin push higher fails to break through the $42k resistance, Bitcoin may return to the $33k region. This possible lower low would allow more whales’ orders to be executed.
Bitcoin price prediction
If Bitcoin strikes a lower bottom, which means it fell below $30k, it will most likely not recapture its all-time high when it reverses. Caution should be exercised on the way up, because it will continue in a head-and-shoulders pattern.
If Bitcoin falls below $30k, the left shoulder and head will be finished, and the top of the right shoulder, if it reverses, will be below the current all-time high of $69k. In that case, it is best to be realistic and take profits along the way.
Following the head-and-shoulder pattern, it might take a few months to complete the right shoulder. Using the .618, the right shoulder’s major resistance is $55k, implying that the top is limited to below the all-time high, and the next leg down might send Bitcoin below $20k.
The reason behind the LUNA drop and the DeFi debacle
Terra (LUNA) is looking quite weak as a result of the DeFi crisis in its ecosystem, which has caused a larger pullback than it normally would during this correction.
Magic Internet Money (MIM) is a collateralized stable coin on Terra (LUNA) that is currently losing its peg as a result of some people dumping MIM, which allows them to create leverage positions on the Anchor Protocol utilizing Degenbox.
Degenbox effectively lets users leverage up on Anchor yields by borrowing MIM against aUST, selling the MIM for UST, borrowing additional MIM against the new aUST, and so on. They end up with a long UST, short MIM position that earns 100% + APY via Anchor. (See our educational on that here.)
This has resulted in a chain reaction of drops from Magic Internet Money (MIM) to SPELL token, the rewarding token connected with Abracadabra.money, the lending platform, and Wonderland (TIME), the MIM decentralized reserve currency protocol on Avalanche.
This has also resulted in LUNA dumping, since individuals are concerned that there would be less demand for UST as a result of Degenbox unwinders effectively ending up with UST instead of MIM.
The revelation earlier this week that the individual in charge of treasury, Michael Patryn, was a co-founder of the infamous collapsed Canadian exchange QuadrigaCX seems to be the common denominator in people departing MIM.
Since then, a community poll has been held to determine whether Michael Partryn alias Sifu should be replaced as the lending platform protocol treasurer, with over 80% of the total votes voting to do so (by the time the Crypto Banter show went live)..
This is not the time to get out of the market because when the market becomes uninteresting, as it is right now, and retail investors lose interest, the most unexpected big shifts occur, suggesting that you should be ready for one.
If you’ve been making big changes to your portfolio, be sure to invest in fundamentally strong projects like AVAX, FTM, SOL, ETH, and most Layer-1s, which are expected to outperform once the market regains enough confidence.