Bitcoin (BTC) losing over 50% in a month may have a big silver lining as lower prices set up a classic bull flag.
On Thursday, Philip Swift, creator of the Pi Cycle Top indicator, said that this year could still see a major Bitcoin price high.
BTC price drop’s saving grace?
Pi Cycle Top uses two moving averages — the 111-day and the 350-day multiplied by 2 — to determine likely market tops with an error range of just three days.
It has proven extremely accurate, and current conditions are setting up a crossover from the two averages which suggests a return to bullishness.
“The 111dma (orange line) continues to rapidly drop below the 350dma x 2 (green line),” Swift commented on Twitter.
“This is setting up another cross, and therefore potential high, in the coming months once price starts trending back up…which I believe it will.”
Bitcoin price bottom close?
This provides a firm counterpoint to short-term price action amid fears that a so-called “death cross” of two other moving averages may cause pain in the coming weeks.
Last week, analyst Filbfilb, who together with Swift heads trading suite DecenTrader, laid out the potential for significant moves up or down for BTC/USD.
“Price action is some way from the 20 Week Moving Average (WMA) which is typically the line between Bitcoin being either in a bull or bear market and as such remains a bearish scenario for Bitcoin,” he wrote.
“Should Bitcoin find sufficient demand in the low 30s, the 20 WMA would be expected to act as resistance. A drop lower would likely make the low $20s or the 78.6% retracement a likely target. As such, price action over the next week particularly important.”
As Cointelegraph reported, however, a consensus is building that a local bottom has formed at $36,000 for BTC/USD. This was predicted even before the latest drama involving Elon Musk.