Bitcoin has become too expensive for many to buy after its wild surge above $37,500 this Thursday. But the cryptocurrency still offers attractive buying opportunities with a lower risk profile.
Investment advisors at TradingShot created a fractal-based outlook of Bitcoin’s previous parabolic move in 2017 and the price corrections that occurred during that period. They discovered buying patterns around specific technical support levels – formed by a group of moving average waves – that sent prices to new highs after each retest.
Looking back, during its bull run in 2017, Bitcoin corrected four times by 30 percent, three times by 20 percent, twice by 18 percent and once by 40 percent. Meanwhile, the cryptocurrency resumed its uptrend three times after testing its 100-day moving average and twice after reaching its 50-day moving average.
TradingSpot strategists compared the 2017 bull run to the current one as volatility and price returns are exponential. Just like in 2017, Bitcoin (Go to Buy Bitcoins with Instant Bank Transfer Guide) experienced a surge of up to 880 percent in value and market capitalization between March 2020 and the current month.
And most recently, the cryptocurrency resumed its upward trend after falling 20 percent from its then-record high above $34,800.
On Jan. 7, the BTC/USD exchange rate had reached a new record high of $37,823.
„It should [not] come as a surprise that [traders] bought the 20 percent pullback,“ a note from TradingShot said. „Based on the previous cycle, the odds were in favor.“
According to the analysis, traders could prepare to buy bitcoin – even if its price corrects by 30 percent from current levels. Such a move would land the cryptocurrency at the 50-DMA. Meanwhile, a 40 percent price drop would see BTC/USD test the 100-DMA.
„This is just to show [that] if you are a buyer, you should not panic on [price dips] and have the composure to buy them,“ the note said.
Just recently, institutional investors increased their exposure to the bitcoin market. Data from CryptoQuant, a blockchain analytics platform, shows that mainstream investors bought the cryptocurrency for as much as $30,000 on Jan. 2 – indicating a long-term upward trend.
„The Coinbase outflow on Jan. 2 was an all-time high,“ said CryptoQuant CEO Ki-Young Ju. „It seems that institutions bought $BTC when the price was above 30k. The bitcoin bull market is not over yet.“
He also commented that the total stablecoin inflow across all exchanges increased this week – suggesting that traders could use the dollar-backed tokens to buy more cryptocurrencies.