Bitcoin Breakout Stalls: Is This the End of the Bull Run?

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On Wednesday, Bitcoin (BTC) displayed a positive response to ambiguous Consumer Price Index figures, leading to a spike over $100,000. However, this momentum seems to have dwindled, and another rejection is becoming apparent. Bulls are now aiming for an establishment of a higher support level as the next objective.

Market surges on US CPI data 

The way Bitcoin responded to the unveiling of the December US inflation data was optimistic, as this leading cryptocurrency soared by $4,000 to close above $100,000. Although the overall CPI consumer inflation increased from 2.7% to 2.9%, it’s important to note that the core inflation rate dipped slightly from 3.3% to 3.2%. Consequently, it seems unlikely that there will be a reduction in interest rates by month’s end.

Not only Bitcoin experienced turbulence due to this broad market disturbance. The S&P 500, which seemed poised to exit a rising trend it had maintained since mid-2023, unexpectedly surged from its lowest point and added 3% to its value on that day.

Big buy from U.S. Spot ETFs on Wednesday

Yesterday, my observation revealed that the U.S. Spot Bitcoin ETFs served as a significant catalyst. A combined total of approximately 7,820 Bitcoin was bought across these 10 ETFs. Notably, Fidelity’s FBTC fund led the way with a substantial purchase of 4,800 Bitcoin.

$BTC rejection

On the daily chart, Bitcoin has hit the downward trendline of the triangle but failed to break above it, indicating a rejection. The price is currently hovering around $99,000, which may serve as potential support, though it’s unlikely to last. Instead, a further decline seems probable.

Despite some recent challenges, there’s a growing optimism about Bitcoin’s price. If Bitcoin manages to avoid setting a new low, dipping below the candle wick of $89,300 seen on Monday, it might trigger an inverted head and shoulders pattern. This pattern would be formed by the initial dip seen on December 30 (left shoulder), the ‘head’ being the dip on Monday, and potentially a third dip around the $90K region (right shoulder). If this occurs, it could generate the force needed to break free from the current triangle and potentially reach the previous high of $108,000.

Bollinger Bands remain positive for $BTC price

Bollinger Bands are an essential resource for experienced investors and traders. They adapt to market fluctuations by expanding or narrowing according to the level of volatility. The more they widen, the higher the market’s volatility, while a contraction indicates lower volatility. When the price approaches or surpasses the upper or lower bounds, it is often seen as overbought or oversold respectively.

On the graph presented weekly, you’ll notice that the gap between the upper and lower lines (often referred to as ‘jaws’) is expanding, suggesting an increase in prices. This trend may persist until the red line at the top begins to curve downward, indicating a possible decrease in prices. It’s worth noting that this signal on the weekly chart is generally trustworthy, as demonstrated by past instances where the red line has bent down and predicted a downtrend, which typically turns out to be substantial. However, keep in mind that Bollinger Bands, like most other price indicators, tend to lag. This means that the price might decrease before the bands do so.

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2025-01-16 17:31