Fidelity’s Jurrien Timmer: Bitcoin oversold at $ 40,000 as “critical support”
A brutal bear attack on the market earlier this week brought Bitcoin price below $ 40,000 for the first time since September 2021.
Many analysts predicted that BTC will continue to decline and move towards the $ 30,000-35,000 range, but hit the $ 40,000 mark as support on Wednesday (Jan. 12) after a sudden surge above $ 44,000 regained. This sparks hope that $ 40,000 is likely to be the bottom for Bitcoin before it continues to rise through 2022.
Jurrien Timmer, Global Chief Macro Officer at Fidelity Investments phone call US $ 40,000 is “critical support” as BTC is “technically oversold”, which could pick up again in the short term.
BTC / USD daily frame price chart | Source: TradingView
At the core of Timmer’s bullish outlook are three catalysts: the stochastic RSI, the S-curve pattern, and the Bitcoin-gold ratio.
A clear rebound in the stochastic RSI. of bitcoin
In particular, the stochastic RSI is a momentum indicator that compares the closing price of an asset to its high-low range for a period of time. The indicator fluctuates between 0 and 100, with areas above 80 indicating “overbought” and areas below 20 indicating “oversold”.
The indicator helps traders spot trend reversals by tracking the relationship between the high-low area (% K) and the moving averages of the same high-low area (% D). The market returns a buy signal when wave% K crosses wave% D from below in the oversold area.
There is also a sell-signal back when the% K-Line crosses the% D-Line from above in the overbought zone.
As Timmer notes, Bitcoin’s% K wave has risen above the% D wave, indicating a propensity to buy once the price gains support above $ 40,000.
The BTC / USD price chart has its most recent pivot on support and the stochastic RSI | Source: Loyalty
“Bitcoin has hit $ 40,000 and is now technically oversold,” Timmer tweeted Wednesday, adding that “$ 30,000, $ 40,000 appears to be an important area of support.”
The price follows the S curve
Timmer also identified a so-called curve – as the pink wave in the graphic below shows – as a tool to predict the end of the bearish cycles of BTC since 2012.
Bitcoin supply and demand patterns | Source: Loyalty
From April to June 2021, the curve followed Bitcoin price action and rebounded from $ 30,000 and is currently acting as a similar support at $ 40,000, increasing the likelihood of a rally. The next rebound could hit levels near $ 100,000.
“The $ 30,000 level in 2021 offered support based on my supply and demand (S-curve) model. The same level appears to have risen to $ 40,000, again providing fundamental support. It’s a moving target that is often a fundamental anchor for price, ”Timmer said said.
BTC / gold ratio shows that Bitcoin is suffering also to sell
Bitcoin also appears oversold in relation to its price development compared to gold, albeit “moderately”. As Timmer noted, the so-called BTC / gold ratio has slipped to the support at 22 after peaking twice at 37.4 in 2021.
Bitcoin versus gold | Source: FMRCo, Bloomberg, Fidelity
Meanwhile, the decline has pushed the Bollinger Band of that ratio into oversold territory, a classic buy-signal that suggests that capital may begin to shift from the gold to the bitcoin market.
“Overall, these charts tell me that Bitcoin should have both technical and fundamental support at $ 40,000. That doesn’t mean it can’t go down, but it looks like $ 40,000 is where it was now $ 30,000. “
That prediction is in line with Bloomberg Intelligence’s recent outlook for the crypto market. The report, authored by senior commodity strategist Mike McGlone, identified capital mobility from the gold market in Bitcoin. McGlone also indicated that this trend will continue to counter the nearly four decades of high inflation that is the result of the Fed’s loose monetary policy.
“We expect gold to move closer to $ 2,000 an ounce in 2022, but bitcoin will rise faster,” wrote McGlone.
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