A possible thesis on BTC price action running into the halving
The most pressing question nowadays regarding Bitcoin is whether its price will continue to rise. Providing an exact answer to this question is nearly impossible, so this article is merely a personal speculation on my part. I will take various factors into account to determine possible price changes and attempt to assist in decision-making regarding purchases. The BTC price action is not something anyone can predict, but there are signs that we can use to our advantage.
Zoom out on the charts to avoid emotional actions
Looking at timeframes below 4H is the root of the bad decision-making in futures and spot trading alike. It’s not the best way to determine the next possible moves of any cryptocurrencies. This is the root of the mistakes and losses in trading crypto most of the time. The price actions can get hectic quickly, even if we are up in gains for a short period, it can change for the worse at any given moment.
Let’s examine the weekly BTC chart first. We will look at the Bollinger Bands, the RSI, the volume profile, and the structure of the chart in general.
The most concerning part of the technical part on the BTC chart is the RSI (Relative Strength Index) which has been at overbought territories for a long time. It’s important to note that the BTC RSI can remain in these overbought areas during a bull run for a prolonged time, but it can signal an upcoming correction as well regardless of the current state of the crypto market.
The RSI shows whether the bulls or the bears are in control of the price moves. As of the 25th of March 2024, the bulls are in control, but it seems like they are starting to lose their strength due to the hype surrounding the upcoming Bitcoin halving. The RSI reading of BTC now is at around 84.
The Bollinger Bands
The exact definition of the Bollinger Bands according to Fidelity is the following: Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Because the distance of the bands is based on standard deviation, they adjust to volatility swings in the underlying price.
Let’s make it a little bit easier to understand. The Bollinger Bands can show the range of possible price movements. When it’s narrow, the trading activity is low, and when it’s wide the trading activity is higher, thus volatility is higher.
At this point the Bollinger Bands of BTC are wide, so the volatility can change in any direction. It’s the same when the Bollinger Bands are narrow, it usually signals an explosive move in a direction.
The volume profile
The volume profile shows the trading volume on different timeframes. It is an important indicator of whether it’s a correction or a breakout. Traders are observing this indicator for leverage washouts, corrections, and breakouts as well.
For example, when Bitcoin rises with low volume, it indicates some sort of weakness in the move. Similarly, when Bitcoin experiences a leverage washout with low volume, it suggests that it’s not the end of the correction.
The social sentiment
Most traders know, that social sentiment is an excellent indicator of an upcoming move in the cryptocurrency price actions. The Fear and Greed Index is the best tool to analyze the market sentiment next to scrolling through crypto Twitter (X).
For example, when the last bull market peaked, my mother, who has nothing to do with crypto, started to talk about Bitcoin. That’s the end phase of a bull market cycle; the media aims to attract more people to buy, only to have them provide liquidity for the market makers and ultimately become poorer.
Summarized, the Fear and Greed Index might stay in extreme greed for the longer term during a bull market, but this indicator is a helpful tool to decide if we should buy or sell. Usually, when we are in extreme greed, it’s not the best time to buy, and when we are in extreme fear it’s time to buy.
My personal Bitcoin price prediction
Please note, that this is only my thesis and not financial advice. In my opinion, in the upcoming weeks, we are going to have a complex correction. All the influencers and crypto frens I know are overly bullish and the media is pushing BTC now too. Not to mention the BTC run we have witnessed was fueled by the upcoming BTC halving.
Looking at these factors, and looking at the chart structure, a correction would make sense. If I look at the weekly Bitcoin chart, I would assume we could go down to the 48K-52K range. I would be very happy if we could go back to fear.
On the other hand, there could be a fake-out before a meaningful correction. Nothing in this article is a suggestion, these are personal opinions only. Please always follow your instincts and thoughts. This is just a thesis.
