Over the last 24 hours, Bitcoin has fallen by 7.65% and now sits at slightly above $40,000. Against this background, the trading volume jumped sharply and amounted to $26 billion. At the same time, altcoins followed Bitcoin, but it is important to note that they suffered less than the first cryptocurrency. This is indicated by the Bitcoin market dominance, which dropped to 42.25% yesterday. This fact should be taken into account, as it means that capital may flow to altcoins.
Let’s take a look at the Bitcoin chart and try to figure out what to expect from the price this weekend:
Almost a month ago, on January 25, Bitcoin dropped to $32,917. After that the price corrected itself and rose to almost $46,000 from 3 months following that date. As a result of these movements, a global falling wedge appeared on the chart, which is a pattern indicating an upward reversal. However, it is too early to talk about the future of this formation.
Within this figure, a local rising wedge has formed in 5 weeks. This pattern, on the contrary, is a signal for an upcoming decrease. And you need to pay attention to it now, because yesterday’s daily candle broke the lower boundary of this formation. Moreover, the chart even consolidated below it.
This means that Bitcoin may experience a serious decline in the next few days. If this reversal pattern works itself out, the chart may drop by $10,000 – $11,000 to the $29,000 – $31,000 area where the lower boundary of the global descending wedge comes. Therefore, this scenario is confirmed.
You also need to look at yesterday’s daily candle, which is a bearish sign given its large body and short candles. It also means the cease of all the last two weeks’ growth. We can hardly consider this formation a bearish absorption. Together with the falling wedge and the lack of buyers, this only strengthens our expectations for a further price collapse.
Remember that today is the last working day of the week. This means that big players will fix their deals and the ongoing decline may continue. Therefore, it is necessary to be extremely careful when entering the market. We expect that the price will approach the nearest local support level of $38,500 – $39,500 already today.