Leading Technical Analysis Expert Predicts a Bitcoin Shakeout Before Rally

Over the last few weeks, bitcoin has been struggling to stay above $10,000. The bullish steam that pushed the dominant crypto to $13,880 is fading away. Armchair traders are quick to notice the coin’s growing weakness.

A pseudonymous trader named Escobar has closed short-term long positions. While doing so, the analyst is also maintaining shorts above $12,000.

Escobar is not alone fearing that long positions will likely lead to losses.

Fear Is Gripping Cryptocurrencies

Sentiment in cryptocurrencies has dramatically fallen over the last two months. The value of the Fear and Greed Index has plunged since late June, around the same time bitcoin recorded its 2019 high. This is an indication that market participants are worried that the cryptocurrency has more downside potential.

This chart shows that crypto investors are jittery | Source: Alternative.ME

The overall fear in the cryptocurrency market may not be unfounded. Todd Butterfield, a leading expert in Wyckoffian analysis and owner of the Wyckoff Stock Market Institute, predicts that bitcoin will likely plummet in the coming weeks. However, the move down will be nothing but a setup for a strong comeback.

Todd Butterfield on Bitcoin

Richard Wyckoff created the Wyckoff Method because he saw how retail traders were “being repeatedly fleeced” by large institutions. Thus, he created a strategy that helps everyday traders to identify market trends and move in unison with the big players.

Todd Butterfield created the Wyckoff Stock Market Institute with Richard Wyckoff. Using Wyckoffian principles, he’s been on the money with his calls on bitcoin this year.

The Wyckoff whiz exclusively spoke to CCN.com and revealed his latest forecast on the leading cryptocurrency. He noted that bitcoin had gone through predictable steps such as the Preliminary Supply (PS), Buying Climax (BC), Automatic Reaction (AR), and Secondary Test (ST).

Reaccumulation before the next leg up | Souce: Todd Butterfield

In addition, the analyst said:

“Since that time, you can see we have traded sideways with volatility and volume diminishing. This is reaccumulation preparing for the next advance to all-time highs.”

Mr. Butterfield then issued a warning:

“Usually this accumulation will be followed by ending action, which could come in the shape of a ‘Spring’ or ‘Shakeout.’ This would be a break of the support at $9,100, followed by a quick recovery back into the blue trading range, and then sharply out of the upside resistance at $14,000.”

Last modified: June 23, 2020 2:33 PM UTC

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Kiril Nikolaev, CFA @kirilnikk123

Kiril is a CFA Charterholder and financial professional with 6+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on finance and cryptocurrencies. He also has his personal website, Investor Academy, where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Get in touch with Kiril: Muck Rack, Email, Follow on Twitter