Bitcoin traded around $19,900, a record price for the cryptocurrency since December 2017
By hitting prices near $19,900 on multiple exchanges during the US trading session yesterday, Bitcoin set a new all-time high (ATH) and looked set to extend gains above $20,000.
The upside, however, cooled off and BTC/USD declined to prices around $19,500. A breakout above the $20,000 price, however, could see bulls target a new ATH near $22,500.
But while Bitcoin remains on track to reach its highest price ever, the technical picture suggests a short term correction could see BTC/USD retrace to lows of $16,000—$14,000.
According to CryptoQuant CEO Ki Young Ju, whales have begun to increase their BTC deposits on exchanges. The data suggests a likelihood of a sharp sell-off in the next few days. If that happens, Bitcoin’s price could drop to lows of $16,000 again before recovering to continue its uptrend to a new all-time high.
Whales have increased deposits on exchanges. Source: CryptoQuant
The above outlook is also supported by the technical picture on the weekly chart. As with the above perspective, the chart shows the possibility of a sharp correction short term.
There is a suggestion of a cup-and-handle pattern formation on the chart and if the pattern validates with the completion of a “handle”, it is likely BTC/USD will retreat to $16,000—$14,000.
BTC/USD weekly price chart. Source: TradingView
Also suggestive of the bearish outlook is the weekly RSI. The indicator continues to trend higher within the overbought territory, likely to hit overextended levels and signal a downturn. If the momentum weakens amid increased volatility, it’s likely to encourage bears into attempting a breakout below $19,000.
Looking at the 4-hour chart, the Bitcoin price is hovering near the $19,500 level after a slight resistance pushed it back from highs of $19,800.
BTC/USD 4-hour chart. Source: TradingView
The time frame has the RSI positioned just within the green zone. However, it’s slightly flat to suggest both bulls and bears are eyeing the next move.
If the bears succeed in tanking BTC below $19,000, the decline could take prices to $18,570—the 38.2% Fibonacci retracement level of the upswing from $16,400 to $19,873.
Here, bulls will rely on the 50-SMA ($18,190) and 100-SMA ($17,893) for further support. Below that BTC/USD could drop to $17,200 (78.6% Fibonacci retracement level) and then to the lows of $16,000.
On the other hand, if bulls manage to break above $20,000, the upside momentum could see BTC price rally as high as $22,500.