Bitcoin price analysis 25 October: is the current fall a bear trap?

Bitcoin could retest the all-time high

Bitcoin with graph in background                                 
BTC’s price soared above the previous all-time high of $64,919.10 last week to hit $67,020 - Photo: Shutterstock
                                

Bitcoin (BTC) soared to a new all-time high on 20 October after the launch of the ProShares Bitcoin Strategy exchange-traded fund (ETF) on 19 October. Huge demand meant the ETF’s assets under management crossed $1 billion in just under two days after the launch, making it the fastest ever to reach the coveted $1 billion mark.

However, the euphoria was short-lived as traders who had purchased leading up to the event sold the news. Previously, the launch of CME bitcoin futures in 2017 and the Coinbase listing early this year had also elicited a similar response from traders, when they sold after the event had occurred, Nunya Bizniz, an independent market analyst, pointed out on Twitter.

Some analysts believe the bitcoin futures ETF is an inferior product to owning bitcoin. As the ETF holds futures contracts, the fund manager has to roll over the contract on the expiry of the previous one. During a strong bullish phase, owning bitcoin futures could be costly as it trades at a considerable premium to the spot price, also known as contango. 

This could reduce the returns on the ETF compared to bitcoin by about 7% a year, according to Andy Kapyrin, co-chief investment officer at RegentAtlantic, the Financial Times reported. “This will keep it (bitcoin ETF) relegated to shorter-term trading portfolios, rather than long-term holders,” Kapyrin told the newspaper.

Has bitcoin topped out in the short term or is the correction a good buying opportunity? Will bitcoin go up and resume its up-move? Let’s see what charts project. Read our BTC price analysis to find out.

Bitcoin price technical analysis: weekly chart

Bitcoin price technical analysis: weekly chart

BTC’s price soared above the previous all-time high of $64,919.10 last week to hit $67,020 but the bulls did not get enough time to celebrate. The BTC/USD pair gave back a large part of its gains to finish the week at $60,853.05, a 1.08% loss over the previous week’s closing price.

If the price stays above $59,489.75, the bulls will again try to propel the pair above the overhead resistance zone of $64,919.10 to $67,020. The rising moving averages and the relative strength index (RSI) near the overbought zone, indicate the path of least resistance is to the upside.

A break and close above the overhead zone could attract further buying, pushing the pair to $75,000 and then to $90,428.60.

Contrary to this assumption, if the pair once again turns down from the overhead zone, the traders may rush to the exit. The pair could then drop to the 20-week exponential moving average (EMA).

The bitcoin price analysis shows that bears are trying to stall the up-move but the bulls are unlikely to give up without a fight.

Bitcoin price technical analysis: daily chart

Bitcoin price technical analysis: daily chart

BTC’s price turned down sharply on 21 October but a positive sign is that bulls are attempting to defend the 20-day EMA. This suggests that sentiment remains bullish and traders are viewing the dips as a buying opportunity.

The pair could now rise to $64,919.10 where the bears may again pose a stiff challenge. If the price turns down from this resistance, the possibility of a break below the 20-day EMA will increase.

If that happens, the pair could slide to the 50-day simple moving average. Such a deep correction could delay the resumption of the next leg of the uptrend.

Alternatively, if the price rises from the current level and breaks above $67,020, the momentum may pick up and the pair could rally to $75,000.

Bitcoin buy or sell at current levels

Bitcoin price analysis shows that the pair turned down sharply after making a new all-time high but the positive sign is that bulls have successfully defended the 20-day EMA. A strong rebound off the current level could challenge the all-time high and the uptrend could accelerate if bulls drive the pair above $67,020. This bullish view will be negated if the price turns down and breaks below the 20-day EMA.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial advisor before arriving at a decision.

Trade Bitcoin to US Dollar - BTC/USD chart

Bitcoin to US Dollar
Daily change
56204.9
Low: 55997.5
High: 57266.6

Further reading

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