Levels to Watch: Bitcoin Approaches Upside Target

After reaching a new all-time high of more than $61,200 per coin last weekend, Bitcoin is currently trading around $59,000.

After a large bounce off a low of $45,260, Bitcoin cleared the lower level we indicated in our last Bitcoin analysis: $53,000 to $56,000, which we used to trim our position. We stated the next level to watch is $70,000/$80,000 and we continue to believe that Bitcoin will make a local top.

After recent price action, my target is now $65,000/$75,000 before we potentially see a larger drawdown. We will continue to hold our position as long-term it will trade higher but we think there is an opportunity where we see Bitcoin trade at lower levels in the near future.

Below we look at what might be next for the world’s most popular cryptocurrency.

Levels to Watch

Bitcoin is now approaching our upside targets for the end of this larger 3rd wave, which is on the chart in blue. Several cues are pointing to this region, with a focus on $65,000, $75,000 and $107,000.

However, the internal momentum is weakening, which suggests that the lower targets are more probable than breaking the $100,000 region on this uptrend. The RSI may be particularly important. The RSI has respected the upward trend channel since the 3rd wave started in March of 2020. If this breaks to the downside, the 3rd wave is likely over.

Even more concerning is the negative divergences developing in the RSI on the daily chart. As the price makes a higher high, the RSI is making a lower high. This suggests that price is on faulty support at these levels.

Bitcoin is one of our largest holdings in our I/O Fund. We purchased Bitcoin in March 2020 at around $7,750 and sent an alert to our premium subscribers. We alerted premium subscribers for additional entries at around $10,000, $11,000, $12,000, $20,000, and $49,000.

Our deep experience in technical analysis, as well as Beth Kindig’s conviction in her fundamental analysis that institutional investors, economic uncertainty, and mobile payments would push the price higher, gave us the confidence to average up in Bitcoin as the trend continued along our projected path.

Even with the potential for a larger drawdown in the near future, we do not have any intention to make any drastic moves with Bitcoin. We have trimmed some in the $55,000 region, and may trim some more if we reach the $65,000. However, we see any large drawdown to be an opportunity for Bitcoin and we will likely enter again if/when this happens.

Bitcoin is up almost 100% this year, and we’re long since $7,753 for a gain of more than 650% in our I/O Fund, which is invested in the most important tech microtrends.

While some traders were calling for a crash in Bitcoin after the last dip, we saw no reason to sell, and instead identified the $28,000 as a likely shallow bottom to target.

Download our free e-book on Bitcoin.

Disclaimer: Knox Ridley and the I/O Fund is currently invested in Bitcoin. The content in this article is intended to be used for informational purposes only. The content is the expressed opinions of the author and is intended for educational and research purposes. Any thesis presented is not a guarantee of any particular stock’s future prices, so please factor this risk into your own analysis.

 The author is not a licensed professional advisor. Please seek counsel from a licensed professional before acting on any analysis expressed in this article, to see if it is appropriate for your personal situation.