Bitcoin Attempts to Invalidate Reversal Pattern: Can Bulls Take Control?

Von | 30. Mai 2023

Summary of the Article

  • Bitcoin’s price stopped advancing after meeting stiff resistance at the $30k area and a head and shoulders pattern formed in the last couple of months.
  • Bulls are trying to invalidate this pattern, but a confirmation would mean that Bitcoin’s price could fall to around $23k.
  • Friday’s NFP report is key for Bitcoin and the US dollar as it has been showing a negative correlation with the US dollar lately.

Bitcoin Fails to Confirm Reversal Pattern

After an explosive start to the year, Bitcoin’s price stopped advancing after meeting stiff resistance at the $30k area. Bears formed a reversal pattern over the last couple of months – a head and shoulders. If confirmed, this would mean that Bitcoin’s price could fall to around $23k. Bulls are now fighting to invalidate this pattern.

Negative Correlation With US Dollar

Institutional investors have included Bitcoin in their portfolios, causing it to become more correlated with other financial market assets such as EUR/USD. The negative correlation between these two assets means that they move in opposite directions; when one moves up, the other moves down. This is why Friday’s NFP report is so important for both currencies – it can determine which direction they will move in next.

Direction of Future Price Movement Unclear

At present, it is unclear whether or not bulls will be able to invalidate the head and shoulders pattern, meaning that there could be further downside ahead for Bitcoin if confirmation occurs. As such, traders should keep an eye on Friday’s NFP report as well as any news regarding institutional investment flows into or out of cryptocurrency markets in order to gain insight into future price movements.

Impact on Other Assets

An increase in investments into cryptocurrencies will likely lead to further gains in other asset classes such as stocks and commodities due to positive sentiment generated by increased liquidity flowing through global markets. Furthermore, if Bitcoin’s price does indeed fall below $23k then commodities may experience a sell-off due to risk aversion caused by uncertainty surrounding crypto markets at that time.

Conclusion In conclusion, while Friday’s NFP report could provide insight into future prices movements for both Bitcoin and USD pairs such as EUR/USD, its effects will also ripple out into other asset classes like stocks and commodities depending on how much liquidity flows from traditional markets into crypto markets over time