A painful retracement in the Bitcoin (BTC) market earlier this week caused prices to fall below $ 40,000 for the first time since September 2021.
Many analysts predicted that the price would continue to fall in the range of $ 30,000 to $ 35,000, but prices regained $ 40,000 as support and the BTC made a sudden move above $ 44,000 on Wednesday. This rekindled hope is that the $ 40,000 level is probably where Bitcoin could bottom out before it continues to rise in 2022.
Julian Timmer, Global Macro Director of Fidelity Investments Called $ 40,000 “Very Important Support”. Point out that Bitcoin has become “technically oversold” near the level. This can be a rebound in the short term.
At the core of Timmer’s bullish outlook were three catalysts. Stochastic RSI, the so-called S-curve model, and the Bitcoin-Gold ratio metric.
Bitcoin Stochastic RSI Clear Bounce
In particular, the Stochastic RSI is a measure of momentum that compares the closing price of an asset over a particular period to the high to low range. The indicator fluctuates between 0 and 100, with areas above 80 indicating “overbought” and areas below 20 warning of “oversold” status.
The indicator helps traders find a trend reversal by tracking the relationship between the high-low range (% K) and the same high-low range (% D) moving averages. Therefore, if the% K wave intersects the% D wave from the bottom in the oversold area, the market will return a buy signal.
Similarly, if the% K line crosses the% D line from the top in the overbought area, it returns a sell signal.
As Timmer points out, Bitcoin’s% K-Wave has risen above the% D-Wave, showing a buying trend as well as maintaining support with prices above $ 40,000. ..
“Bitcoin has set itself apart at $ 40,000 and is now technically oversold.” Tweet Earlier Wednesday, Timmer added, “Like $ 30,000, the $ 40,000 level seems to be a crucial support area.”
Price follows S-curve model
Timmer also identified a so-called demand curve that helped predict the end of Bitcoin’s bearish cycle after 2012, as shown by the pin wave in the graph below.
Between April and June 2021, the curve followed a BTC price action that bounces from $ 30,000 and is now functioning as the same support at around $ 40,000, with the next BTC rebound reaching levels near $ 100,000. There is a possibility.
Related: Wall Street is not sure of Bitcoin $ 100,000 again this year: JP Morgan Survey
“The $ 30,000 level in 2021 provided support based on my demand model (S-curve model).” I have written Timmer, added:
“The same level has risen to $ 40,000 and appears to be providing basic support again. This is a moving goal that generally provides a basic anchor for the price.”
BTC / Gold ratio suggests that Bitcoin is oversold
Bitcoin seems to be oversold, albeit “moderately” in terms of price performance against gold. As Timmer pointed out, the so-called BTC / Gold ratio slipped to support at 22 after topping out twice at 37.4 in 2021.
Meanwhile, the plunge pushed the proportion of Bollinger Bands into the oversold territory. This is a classic buy signal that capital may start moving from gold to the Bitcoin market.
Overall, these charts tell me that Bitcoin should have both technical and basic support at $ 40,000. That doesn’t mean it can’t go down, but it looks like $ 40,000 is the new $ 30,000. /the end
— Jurrien Timmer (@TimmerFidelity) January 11, 2022
This forecast was in line with Bloomberg Intelligence’s recent cryptocurrency outlook. Written by senior commodity strategist Mike McGlone, this report identifies capital rotation from gold to the Bitcoin market. McGrone also said this trend would continue as inflation rates were high for nearly 40 years as a result of the Fed’s loose monetary policy.
“We expect gold to move towards $ 2,000 per ounce by 2022, but Bitcoin will grow at a faster rate,” McGlone wrote.
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