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Top technical analyst sees Bitcoin price pullback extending to below $60k

Published 04/16/2024, 12:32 PM
Updated 04/16/2024, 12:34 PM
© Reuters

Bitcoin's recent price rally seems to be encountering some headwinds. After a significant climb throughout much of the past year, the world's leading cryptocurrency has witnessed a pullback in recent days. 

This decline comes amidst a slowdown in inflows to Bitcoin Exchange Traded Funds (ETFs), which had previously been a major source of upward pressure. The pullback has intensified over the weekend, coinciding with a rise in geopolitical tensions. 

These global uncertainties have traditionally caused investors to seek safer havens, potentially leading some to move away from riskier assets like Bitcoin.

LunarCrush analyst Joe Vezzani told Investing.com that “Bitcoin and other cryptocurrencies often see outsized reactions to breaking news on weekends before traditional markets open.”

“While the initial response can be significant, historically these moves are often retraced once investors have time to fully digest new information,” he stated.

Furthermore, Vezzani highlighted the growing maturity and resilience of digital asset markets, which are becoming “increasingly efficient at absorbing geopolitical shocks.” 

“Bitcoin, in particular, is cementing its status as a bellwether for investor sentiment and a key indicator to watch when unexpected events rattle global markets,” he added.

Even so, it's crucial to view this pullback in the context of Bitcoin's historical cycles. The cryptocurrency is known for its halving events, which occur roughly every four years and significantly reduce the amount of new Bitcoin entering circulation. This programmed scarcity has historically been a major driver of price increases.  

However, the post-halving period can also witness periods of consolidation or correction, as the market adjusts to the reduced supply. This cyclical nature of Bitcoin's price movements provides a sense of stability and predictability, helping investors make informed decisions.

Fairlead Strategies expects deeper Bitcoin price pullback

In a note to clients this week, investment research analysts at Fairlead Strategies said the recent decline in the Bitcoin price could lead to the price moving towards support at $57,800. 

“Given [the] increased short-term risk, we assume the weekly stochastics will confirm their downturn in an intermediate-term setback,” said the firm. “This warrants a shift to a neutral intermediate-term bias with cloud-based support intact.”

However, there is also a potential further downside in the price of the leading cryptocurrency. Fairlead feels that if the cloud indicator does not hold, secondary support is near the $51.500 level, defined by a 38.2% Fibonacci retracement of the cyclical uptrend.

However, Fairlead clarifies that, in their view, the pullback is just an interruption in the Bitcoin uptrend, not the start of a bearish reversal, given the recent breakout above the 2021 high. As a result, they see a long-term target of $80,600 coming into play.  

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