Bitcoin didn’t fare too well on Wednesday. After recovering to $10,300 from the weekend’s low of $9,500 — a gain of just over 8% — the price of the leading cryptocurrency fell off a cliff as the day came to a close on Wednesday.
In the span of a few hours, BTC plunged from $10,300 to as low as $9,250 on some exchanges, marking a crash of approximately 10%. This move was so violent that over $100 million worth of long positions were liquidated on BitMEX, accentuating how many traders were not expecting such a drop to take place.
While there are many that have said Bitcoin’s drop is a precursor to an even steeper correction, one that may take BTC to the $8,000s and $7,000s, one analyst remarked that it may actually satisfy a bullish pattern.
There’s a Silver Lining to Bitcoin’s Flash Crash
In a tweet, a self-proclaimed Bitcoin trader Alexander Hartz noted that over the past few days, Bitcoin’s chart has formed a falling/descending broadening wedge, marked by lower highs and lower lows and an expanding trading range.
While successive lower highs and lower lows are often seen as signs of a bearish trend, Hartz remarked that the falling broadening wedge is textbook bullish, especially since Bitcoin entered the wedge from an uptrend.
Hartz remarked that should the chart pattern play out as it does in textbooks, BTC will fall towards $9,100, the lower part of the wedge, before bouncing towards $11,500 and $12,000 after it breaks out of the top of the wedge in the coming week.
— Alexander Hartz (@AlxHartz) February 20, 2020
It isn’t only Hartz who has suggested that Bitcoin remains cautiously bullish, even after the brutal drawdown that was sustained on Wednesday.
Prominent trader HornHairs remarked that while the shakeout thus far has been “nasty,” a potential bull case for this nascent market remains: Bitcoin closed a daily candle above $9,485, a key swing level.
This, the analyst claimed, will maintain the range low and “bullish structure,” which would clear BTC for “further upside” in the near future.
$BTC Macro Update:
Nasty shakeout so far. Midrange pushing back.
Want to see price close today above $9485 to maintain range low and bullish structure. Would still look good for further upside in that event.
2 hours to go. 🧐 pic.twitter.com/B4lavJCKpQ
— HornHairs 🌊 (@CryptoHornHairs) February 19, 2020
HornHairs did not elaborate in this message on where exactly he expects for Bitcoin to head should it close above $9,485 as it did, though he remarked in other tweets that BTC could return to $10,500, drawing attention to the clear bullish SFP rejection under $9,500.
Photo by Dmitry Demidko on Unsplash