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Bitcoin: Sideways or Triangle?

Bitcoin behaved extremely restrained throughout the weekend drawing a doji candlestick near the support at 31,082.82, marked with a red dotted line. The slow decline gave way to uncertainty.

Against this background, the previous forecast has not lost its relevance, but there is something that made us look at the situation from a different angle.

After the big Chinese collapse during the month, BTC/USD clearly worked out a wide frame - the sideways borders 31,082.82 - 41,980.24. But in recent weeks, the decline has slowed down, and in the course of the short-term recovery failed to reach resistance.

Now, when the price has once again returned to the support at 31,082.82, the consolidation period on the daily chart began to resemble a rectangular downward triangle. And this changes the situation. A descending triangle is a figure that breaks down and works down approximately its height.

If so, then upon the breakdown of 31,082.82, the price may fall to about $20,000 per coin. But we have already discussed this in the previous review. Are there any alternatives left? I think so, and here's why:

  1. The triangle does not yet differ in particular technical correctness, its upper boundary is drawn very tentatively.
  2. Until the level of 31,082.82 is broken with confirmation as resistance, BTC/USD still has a chance to recover.
  3. In this case, either the upper border of the triangle will be confirmed, or the price will break through it and prove that the sideways trend 31,082.82 - 41,980.24 is relevant.

Against this background, the forecast for the recovery of bitcoin is not canceled, but there is concern about the likelihood of a deeper correction.

Meanwhile, the opinions of influencers and analysts are very different, which is not surprising. Some predict a bearish scenario, others - an increase that is about to begin.

For example, the popular network analyst Will Clemente believes that the bitcoin rally is not far off, as the main cryptocurrency is faced with the possibility of a reduction in supply. He stated that on-net signals indicate an increase in bitcoin adoption around the world.

He also adds that bitcoin's illiquid supply ratio is on a steady upward trend following the sell-off caused by the COVID-19 pandemic in March 2020.

Clemente also emphasizes that whales, or organizations that own coins between 1,000 and 10,000 BTC, have been actively buying since early July. The analyst says these investors have already added more than $2.40 billion in bitcoin to their holdings in the past 14 days, setting the stage for growth.

Interestingly, the scenarios of the triangle breakout and the bitcoin whale optimism may not contradict each other at all. The only question is, from what values the main cryptocurrency will begin to recover.

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The material has been provided by InstaForex Company - www.instaforex.com