Bitcoin down 13% versus ATH, has sentiment turned bearish?

Bitcoin appears to have formed a classic head and shoulders pattern, but the bulls can still win, veteran trader Peter Brandt said.

In an Oct. 27 tweet, Brandt, known for his accurate BTC price predictions, dismissed a bearish estimate of Bitcoin.

Although Bitcoin slipped to nearly $ 58,000 in a renewed purge of leveraged traders yesterday, analysts remained calm and even predicted a return to highs in a show of strength that surprised many.

For Brandt, too, there is little reason to ignore Bitcoin because of the current price action.

“Head and shoulders don’t always create a bear market towards the implied target. This pattern can also fail (bullish) or gradually turn into a greater overload (exhaustion). “

An accompanying chart shows last week’s all-time high of $ 67,100 surrounded by two lower highs creating a head and shoulders pattern.

Head and shoulders don’t always have to create a bear market to or beyond the implicit target. This pattern can also fail (bullish) or turn into a major overload (exhaustive). $ BTCUSD pic.twitter.com/8f0E0HqXn2

– Peter Brandt (@PeterLBrandt) October 27, 2021

Traditionally, such events rule out a sustained decline in an asset, with momentum drying up at a certain point and no longer sustainable.

Meanwhile, the idea that Bitcoin could slide into a longer sideways phase has been discussed in the last few days. Analyst Michaël van de Poppe had previously forecast a target of $ 90,000, which is expected to be reached early next year.

BTC price analysis

Now BTC is trading at around $ 59,000 after falling to $ 58,000, a 13% decrease from its high. It is important to determine what caused the correction and whether the bullish sentiment is still intact.

According to the prominent Bitcoin analyst Daniel Joe, the price of BTC has been levered too much. The current market structure in terms of average leverage is very similar to the market structure in November 2020.

The price then fell 16% after the leverage ratio peaked at 0.2. Yesterday the index stood at 0.19 – a clear sign that the market is becoming too confident and could lead to a sell-off.

As a result, the price corrected and fell below $ 60,000, reaching the $ 58,3,000 support held so far. Of course, it’s important to see how the price closes.

Just before the pullback, 1,500 BTC poured into the exchanges and the buying wall at $ 60,000 was broken, resulting in a flurry of liquidations to $ 58,1000 – a 24-hour low as of today. In total, nearly $ 1 billion in leveraged positions was wiped out.

Source: TradingView

Bitcoin price bounced back to tech support around $ 58.3,000 before rising to the current level of $ 59,000 at the time of this writing. BTC closed above USD 58.3,000 daily – first positive step towards recovery.

However, the leverage ratio remains high even if it decreases a little, as can be seen in the following graph:

Source: CryptoQuant

This means that there is still the possibility of further liquidation. In the case of a deeper drop, considerations include $ 58.3,000, $ 57.1,000, $ 55,000, and $ 53,000, among others.

The hourly bullish divergence has also been invalidated as BTC closes below $ 60,000 and hits lower levels. This is why it is important to reclaim $ 60,000 as soon as possible so the cops can take control in the short term.

On the flip side, it’s good to see the funding rate return to neutral, but you should be careful as there could be more liquidations.

Events today have not damaged the overall structure of the market and Bitcoin’s fundamentals clearly show that the long-term uptrend remains intact. This looks like a short term purge of traders with a bottom likely in the 58.3,000 to 53,000 range.

You can see the BTC price here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Annie

Bitcoin magazine

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