Scott Minerd says Bitcoin price will drop to 8K, but technical analysis says otherwise

Bitcoin (BTC) is forecast to drop more than 70% to the $8,000 value area, according to comments from Guggenheim Chief Investment Officer Scott Minerd. this is not the first time he has made a bearish call and in the past he has also made bullish calls. however, minerd’s most recent calls occurred just before major reversals.

scott miner btc price calls:- $600k to $60k → went to $30k.- $10k to $30k → price to $65k.- $8k to $30k (again) → tbd.

Reading: Bitcoin dropped to 8k

it should be noted that mr. minerd, if it follows from the comments above, is a bitcoin bull and has a long term forecast for the largest digital asset in the six figure range. however, if traders and investors used their comments as a sentiment indicator for a down market, then other confirmation data should be used.

Long-term oscillator values ​​support a bullish reversal

Weekly and monthly RSI (Relative Strength Index) and Composite Index show extremes have been reached. these extremes do not predict or guarantee a reversal. still, they warn bears that the momentum for further downside is likely to be severely limited or eliminated.

BTC/USD weekly relative strength index (RSI) (Coinbase) Source: TradingView

The weekly RSI remains in bull market conditions, despite it moving below both the oversold levels of 50 and 40 — until it hits 30, the bull market RSI settings remain. Currently, at 33, this weekly RSI level is the lowest since the week of December 10, 2018, and just below the March 2020 COVID-19 crash low of 33.48.

See also: If The Crypto Crash Is Another Tulip Bubble That Is Really Good News

Likewise, the bitcoin weekly composite index reading is at an extreme. it is currently at the lowest level it has traded at since the week of february 8, 2018. the current level the weekly composite index is at has historically been a strong indicator that a downturn is likely to develop minimum.

BTC/USD weekly composite index (Coinbase) Source: TradingView

The black vertical lines identify the most recent historical lows in Bitcoin’s weekly composite index.

chart patterns in oscillators can help identify upcoming reversals

The use of basic chart patterns such as rectangles and triangles on a Japanese candlestick or American c bar charts is not limited to just the price chart. For example, the great analyst and trader Connie Brown (the creator of the Composite Index) impresses analysts and traders to pay attention to chart patterns in oscillators.

BTC/USD monthly (RSI) (Coinbase) Source: TradingView

The falling wedge pattern on the monthly RSI fulfills all the requirements to confirm that pattern: five touches of the trend lines. It should be noted that the monthly RSI for Bitcoin, like the weekly RSI, remains in bull market conditions, and the current RSI is just below the first oversold level of 50.

another important development with bitcoin oscillators is the regular bullish divergence between the monthly rsi and the monthly composite index. The Composite Index, created by Connie Brown, is essentially the RSI with a momentum calculation: It catches moves that the RSI cannot.

note the structure of the lines in the monthly ROI compared to the composite index. the rsi shows lower lows, but the composite index shows higher lows. that’s a regular bullish divergence.

BTC/USD Monthly composite index (Coinbase) Source: TradingView

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Regular bullish divergence is most often measured between price and an oscillator, but it can also be measured between two oscillators. Regular bullish divergence is a warning sign that the current downtrend will likely face a corrective move higher or the beginning of a new uptrend.

bitcoin price action remains correlated to stocks

Due to continued correlative behavior between bitcoin and the broader cryptocurrency market for stocks, particular attention should be paid to this week, specifically Thursday (May 26, 2022).

Economists and Wall Street continued to express concern about growth. After Target’s (NYSE: TGT) dismal quarterly report last week, all eyes are on other major retailers set to announce earnings on May 26: Macy’s (NYSE: M), Dollar Tree (NASDAQ: DLTR) and Dollar General. (nyse: dg) are all on deck on May 26.

However, given that much of the stock market is below bear market levels, any negative news from retail stocks or the US Federal Reserve is likely to be considered “valued”. Volume on the tech-heavy NASDAQ (NASDAQ: QQQ) has increased, as have inflows to Bitcoin and the broader crypto market.

so if stocks bounce, bitcoin will bounce. bitcoin’s upside potential will likely be limited to the critical 2022 volume and psychological checkpoint at $40,000.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you need to do your own research when making a decision.

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