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

Bitcoin (BTC)’s price dropped to $40,000 on Tuesday due to an unfortunate retracement. Since September 2021, this is the first time that the Bitcoin price has been below $40,000

Analysts forecasted that the price would fall to the $30,000-35,000 mark. On Wednesday, however, Bitcoin recovered $40,000 support and climbed above $44,000. Bitcoin could reach $40,000 in the future, with hopes that it will rise higher by 2022.

Jurrien Timmer, Fidelity Investments’ global macro director, called $40,000 “pivotal support” and pointed out that Bitcoin had become “technically oversold”. This could result in a short-term rebound.

Daily chart of BTC/USD TradingView

Timmer’s bullish outlook on gold was founded upon three catalysts, the Stochastic-RSI model and the Scurve model.

Bitcoin’s Stochastic RSI saw a significant uptake

StochasticRSI is a momentum indicator that compares asset closing prices to its high-low range over a specific period. It oscillates between 0 and 100. The indicator oscillates between 0 and 100. An area greater than 80 is considered “overbought” while an area less than 20 signifies “oversold”. 

By following the relationship of its high low range and moving median within the same high-low range (%D), the indicator assists traders to identify trends reversals. So, the market returns a buy signal if the %K wave crosses the %D wave from below in the oversold territory.

The Overbought Territory will give a Sell signal similar to the previous. If the line crosses the line at %K, the Overbought Territory will send a Sell signal.

Timmer observed that Bitcoin’s Wave %K is rising faster than the Wave %D. As the price held at $40,000., this signals that there is a buy-trend.

BTC/USD Price Chart with recent support pivot and Stochastic RSI readings. Source: Fidelity

Timmer said that Bitcoin was at “a line in the sand” at $40,000 and had become technically oversold. He said $30,000 was a crucial support level.

The S-curve is price dependent.

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.

Demand and supply models for Bitcoin 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.

Similar: Wall Street is still not convinced by Bitcoin $100K in this fiscal year’s JPMorgan Survey

Timmer stated that $30,000 in 2021 would be support for my demand model (Scurve)”

It appears that the same level has moved up $40,000 again, which is fundamental support. The price is usually supported by this moving target.

BTC/Gold ratio means that Bitcoin is in oversold

The performance of Bitcoin relative to gold seems also oversold. Timmer noted that “BTC/Gold”, after having reached 37.4 twice by 2021, has now fallen to support level at 22.

Bitcoin and gold Source: FMRCo. Bloomberg. Bloomberg.

Bollinger Bands for this ratio also fell into an oversold zone due to the plunge. This signal is classic and tells us that capital could be migrating from Bitcoin markets to gold markets.

This prediction was in line with Bloomberg Intelligence’s latest crypto outlook. The report was written by Mike McGlone, a senior commodity strategist at Bloomberg Intelligence. This report found the capital shift towards Bitcoin over gold. McGlone stated that this trend would continue, especially against an inflation rate of almost four decades high owing to loose monetary policy by the U.S Federal Reserve.

McGlone said that Bitcoin is less likely than gold to reach $2,000 an ounce in 2022. 

These opinions, views, and thoughts are not necessarily those of Cointelegraph.com. Risk is inherent in every trade or investment. Before making any investment or trade, you should do your research.

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