Fidelity exec says Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support’

A
painful
retracement
in
the
Bitcoin
(BTC)
market
earlier
this
week
sent
the
price
below
$40,000
for
the
first
time
since
September
2021.

Many
analysts

predicted

the
decline
to
continue
toward
the
$30,000
to
$35,000
range,
but
the
price
reclaimed
$40,000
as
support
again
and
on
Wednesday
BTC
made
an
abrupt
move
above
$44,000.
This
rekindled
hopes
that
the
$40,000
level
is
perhaps
where
Bitcoin
may
bottom
out
before
continuing
its
move
higher
in
2022.

Jurrien
Timmer,
the
director
of
global
macro
at
Fidelity
Investments,

called

$40,000
a
“pivotal
support,”
noting
that
Bitcoin
has
become
“technically
oversold”
near
the
level,
which
may
amount
to
a
rebound
in
the
short-term.


BTC/USD
daily
price
chart.
Source:
TradingView

At
the
core
of
Timmer’s
bullish
outlook
were
three
catalysts:
a
Stochastic
RSI,
the
so-called
S-curve
model
and
a
ratio
metric
of
Bitcoin
to
gold.

A
clear
bounce
in
Bitcoin’s
Stochastic
RSI

In
detail,
the
Stochastic
RSI
is
a
momentum
indicator
that
compares
an
asset’s
closing
price
with
its
high-low
range
over
a
specific
period.
The
indicator
oscillates
between
0
and
100,
with
the
area
above
80
signaling
“overbought”
and
the
area
below
20
alerting
on
“oversold”
conditions. 

The
indicator
assists
traders
in
spotting
trend
reversals
by
tracking
the
relationship
between
its
high-low
range
(%K)
and
the
moving
average
of
the
same
high-low
range
(%D).
So,
the
market
returns
a
buy
signal
if
the %K
wave
crosses
the
%D
wave
from
below
in
the
oversold
territory.

Similarly,
it
returns
a
sell
signal
if
the
%K
line
crosses
%D
line
from
above
in
the
overbought
territory.

As
Timmer
notes,
Bitcoin’s
%K
wave
has
been
rising
above
the
%D
wave,
signaling
a

buy
trend

just
as
the
price
maintained
support
above
$40,000.


BTC/USD
price
chart
featuring
its
recent
pivot
at
support
and
Stochastic
RSI
readings.
Source:
Fidelity

“Bitcoin
has
reached
a
line
in
the
sand
at
$40,000
and
is
now
technically
oversold,”

tweeted

Timmer
early
Wednesday,
adding
that
“like
$30,000
the
$40,000
level
seems
to
be
a
pivotal
support
area.”

Price
follows
the
S-curve
model

Timmer
further
identified
a
so-called
demand
curve

as
shown
via
the
pin
wave
in
the
graph
below

that
has
been
instrumental
in
predicting
the
end
of
Bitcoin’s
bearish
cycles
since
2012.


Bitcoin
supply
and
demand
models.
Source:
Fidelity

Between
April
and
June
2021,
the
curve
followed
BTC
price
action
in

bouncing
back
from
$30,000
, and
now,
it
has
been
acting
as
the
same
support
near
$40,000
which
raising
the
possibility
that
the
next
BTC
rebound
could
reach
levels
near
$100,000.



Related:

Wall
Street
still
not
convinced
on
Bitcoin
$100K
this
year:
JPMorgan
survey

“The
$30,000
level
in
2021
provided
support
based
on
my
demand
model
(S-curve
model),”

wrote

Timmer,
adding:

“That
same
level
looks
to
have
moved
up
to
$40,000,
providing
fundamental
support
once
again.
It’s
a
moving
target
that
generally
provides
a
fundamental
anchor
for
price.”

BTC/Gold
ratio
suggests
Bitcoin
is
oversold

Bitcoin
also
appears
oversold,
albeit
“moderately,”
regarding
its
price-performance
against
gold.
As
Timmer
noted,
the
so-called

BTC/Gold
ratio

has
slipped
to
support
at
22
after
topping
out
twice
at
37.4
in
2021.


Bitcoin
vs.
Gold.
Source:
FMRCo,
Bloomberg,
Fidelity

Meanwhile,
the
plunge
pushed
the
ratio’s
Bollinger
Bands
into
oversold
territory,
a
classic
buy
signal
that
indicates
that

capital
could
start
moving
from
gold
to
Bitcoin

markets.

The
prediction
came
in
line
with

Bloomberg
Intelligence’s
recent
crypto
outlook
.
Penned
by
their
senior
commodity
strategist,
Mike
McGlone,
the
report
identified
the
capital
rotation
out
of
gold
and
into
the
Bitcoin
market.
McGlone
also
noted
that
the
trend
would
continue
especially
against
a
near
four-decade
high
in
inflation
which
is
the
result
of
the
U.S.
Federal
Reserve’s

loose
monetary
policies
.

“We
see
gold
more
likely
to
advance
towards
$2,000
an
ounce
by
2022,
but
Bitcoin
to
increase
at
a
greater
velocity,”
McGlone
wrote. 

The
views
and
opinions
expressed
here
are
solely
those
of
the
author
and
do
not
necessarily
reflect
the
views
of
Cointelegraph.com.
Every
investment
and
trading
move
involves
risk,
you
should
conduct
your
own
research
when
making
a
decision.

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