While Bitcoin saw a strong rejection at $7,500, with the price of the leading cryptocurrency rapidly plunging to $7,200, leading some to suggest that an extended bearish reversal was possible, analysts remain bullish on BTC.
A prominent cryptocurrency trader recently remarked that his analysis of Bitcoin’s chart over the past few months shows that a key bullish divergence is forming, which implies that the price of the asset could surge by 40% in the coming weeks.
Bitcoin Ready to Hit $10,000?
Full-time trader Cold Blooded Shiller recently posted the below analysis of Bitcoin’s Renko candle chart, which shows the price action over the past three years.
While there is little on the chart, the trader drew attention to two previous bouts of price action in BTC’s history, during which the price rallied by 32% and 40%, respectively, after a bullish divergence was formed between his indicator and the price.
The same divergence is forming yet again, implying that BTC could soon rally by up to 40%, which would mean the price of the asset would take $10,000.
It isn’t only this divergence pointed out by Cold Blooded Shiller that suggests Bitcoin is on the verge of bursting higher by 40%.
Earlier this year, Filb Filb posted the below chart, showing that he expected for BTC to jump by dozens of percent to near $10,000, then collapse to the low-$6,000s to interact with the “miners bottom range.”
While some laughed this off as pure bearish sentiment at the time, FilbFilb’s prediction was proven to be nearly 100% accurate, with Bitcoin surging past $10,000 in a temporary relief rally, then crashing the mid-$6,000s just earlier this month.
Downtrend Not Over Yet?
Although Cold Blooded Shiller’s analysis seemingly implies a bounce is on the horizon, it may not be a bounce that will take Bitcoin out of the bear trend formed after the $14,000 peak established in June.
The trader noted that as it stands, Bitcoin is in a “markdown from distribution” near the $13,000-$14,000 top, a markdown contained by a descending channel that has existed since the top of the recent bull run. When the top of the channel is hit, sellers dump their coins; when the bottom of the channel is touched, buyers step in, pushing the price back towards the middle of the channel.
As it stands, Bitcoin at $7,200 is in the middle of the channel, seemingly in no man’s land, thus not close to a bottom.
“From a volume perspective, there is nothing to me that screams “THIS IS THE BOTTOM.” For both markdowns and markups we typically expect to see “climactic” volume,” Shiller wrote, trying to accentuate that there are no concrete signs the bottom is in for the Bitcoin market.
He later remarked that for him to conclude that the bottom is in, BTC will have to rapidly move out of the abovementioned descending channel on a large influx of volume, implying a selling climax, to fall into support, bounce, then continue sideways in preparation for the next macro move.