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Today, the Bitcoin price is plummeting as buyers race to win after it hit an all-time high of $64,945. Bitcoin has slipped more than 5% from its peak and is now priced at $61,300. Its market capitalisation exceeds $1.16 trillion.
What happened: Bitcoin has been gaining ground this week. This success was mostly due to the mainstreaming of digital currencies as a result of Coinbase’s IPO. In addition, there are indications that demand for the digital currency has increased in recent months.
However, despite reaching an all-time high, the Bitcoin price has struggled. This corresponds to what I expected on Wednesday. In my post, I predicted that the price will fall as a result of the buy the rumour, sell the news scenario. This is where an investor buys an asset ahead of a major event and only sells it after the event occurs. We saw a similar scenario this week when the US dollar fell after high US inflation data.
Why it matters: Whether you’ve been following Bitcoin prices in the past, you’ll note that this market movement is nothing fresh. Historically, the currency has struggled marginally below main resistance levels such as $65,000, $60,000, and $55,000. This is mostly due to profit-taking, since many traders set take-profit thresholds at these levels. Furthermore, after a big rally, BTC rallies seem to stop. So, how will the Bitcoin price do over the weekend?
If you track Bitcoin, you are aware that major price movements normally occur during the weekend. Furthermore, the stock and forex markets are closed at this period. On the regular graphic, we can see that the Bitcoin price has formed an increasing wedge trend, which is depicted in black.
As my colleague pointed out yesterday, this is usually a bearish warning in technical research. This wedge is approaching the point of confluence. As a result, we can not rule out a significant drop in BTC rates in the near term. The concern is whether or not this operation will take place this weekend. It’s unlikely, but it could happen next week.