Bitcoin seems to have finally broken its 12-week downtrend. Positive emotions are returning after a strong performance over the weekend. On the other hand, strategist Lyn Alden says that Bitcoin is not particularly bullish in 2022 and warns that BTC is still susceptible to a capitulation event. Details are on Kriptokoin.com.
Bitcoin breaks downtrend
BTC closed the day at $41,600 with an 11% rise on Friday. Although activity contracted on Saturday and closed down 0.6%, Sunday and Monday saw the continuation of the bullish form. Crypto YouTuber Lark Davis noted that the weekend price action broke the downtrend that has been in place since mid-November 2021. Crypto markets have had a tense start to 2022. Bitcoin has lost 30% of its value. The turning point came on January 23 when BTC started to rise. However, the small candlestick bodies revealed a marked lack of faith by the bulls. By Friday, the bulls made a decisive move, pushing the price from $37,300 to $41,800 and closing the day just a little lower from the highs at $41,600. In this event, a rating of 20, classified as extreme fear by the Fear and Greed Index, rose to 45 today, not far from neutral territory.
The question is, is this the start of a major trend reversal? According to Davis’s analysis of the Relative Strength Index (RSI), the signs look positive. RSI recorded a breakout in the downtrend with much higher momentum over the weekend. Davis points out that this last happened in mid-July 2021, followed by a 130% price rally, including all-time highs. Davis says:
Will we see a 130% price rally now? That would be great, who knows? But what is clear is that we have definitely come out of this downtrend and when we broke these RSI downtrends before, they came just before a major price rally.
What’s next for bitcoin? While the techniques might support a reversal, what about on the fundamental side? Recently, there has been talk of another country that will adopt Bitcoin, following in the footsteps of El Salvador. While there is no other news on this front, rumors suggest that the next one will be a Latin American country. Panama, Paraguay and Guatemala are among the names rumored about. However, there are rumors about a state in the United States preparing to break the convention to accept Bitcoin. Analyst Dennis Porter said that if a state adopts BTC, Bitcoin will reach $100,000. Porter later said more states would follow.
Analyst cautious for Bitcoin
Analyst Lyn Alden says that Bitcoin is not particularly bullish in 2022 and warns that BTC is still susceptible to a capitulation event. In a new interview with Stansberry Research, Alden says he looks at the Purchasing Managers Index (PMI) to determine the overall trend for Bitcoin. PMI is an economic indicator that aims to show the health of the manufacturing and service sectors. Here’s what the analyst says on the subject:
Bitcoin’s biggest bull is historically moving forward. 2011, 2013, 2017 and 2020: These have occurred in environments of rising PMI, hence the economic acceleration… Thus, the current type of period in general has not been historically great for Bitcoin’s price action… Currently, Bitcoin is favored by most capital pools due to its volatility. It is classified as a risk asset, so I am not particularly optimistic for the 2022 calendar year.
Legendary Analyst: These Levels Are Coming For Bitcoin!The United States’ PMI is currently at 58, a 9.38% drop from 64 in March 2021. Alden emphasizes that a falling PMI amid a tightening currency environment can act as a catalyst for a capitulation event. On the subject Alden says:
If you experience some kind of market turmoil, you may have a capitulation similar to March 2020 or the fourth quarter of 2018, which the Fed is still trying to tighten into a falling PMI environment. If you get such a capitulation, I would consider it a buying opportunity. I don’t know if we can get this. We can definitely see a break below $30,000 in this kind of capitulation environment.
Despite his bearish outlook for this calendar year, Alden says that in the long run, the crypto asset is still bullish. Alden says: “When I look at multiple years, say three to five years, I still see structural bullishness in Bitcoin when I look at the ecosystem.”
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