A lot of nervousness and general fear has made its way into the cryptocurrency market as Israel and Iran face off and investors may brace for more potential tit-for-tat strikes. Bitcoin appears to be taking advantage of the more bearish sentiment to move sideways and to the downside. However, the resulting chart pattern is likely to be a very bullish bull flag.
Fear permeates the market
Times are uncertain. In traditional markets, the overall sentiment was one of “fear”, with the S&P 500 down 4.2% and the Nasdaq 100 down about the same.
Things are not going so well in the cryptocurrency space either. While the Fear & Greed Index remains at “Greed,” Bitcoin has fallen another 16% since April 8, having ended a 17.5% decline in early March. Fortunately, there was a bounce in the middle, so BTC did drop again to the $60,000 support level.
Source: Coingecko/Trading View
Bull flag formation
One good thing about Bitcoin’s ups and downs is that this depicts a bull flag pattern in technical analysis. If BTC can hold the $63,000 support level or even drop to as low as $60,000, this would simply confirm the bottom of the bull flag.
Furthermore, the longer BTC stays inside the bull flag, the more explosive its move could become if it decides to break out to the upside. The measured swing of the bull flag would be $96,000.
Bearish scenario
On the other hand, if BTC price breaks below the bottom of the flag and breaks through support all the way and drops below $59,000, the next stop could be a sharp correction to $51,000. If this is the route Bitcoin chooses, this would bring about a 30% reversal.
Traders and investors are probably pretty nervous right now. Inflows into US spot Bitcoin ETFs have really dried up over the past week or so, with the Grayscale ETF (GBTC) losing money tipping the scales in favor of BTC outflows rather than inflows.
Fortunes are gained and lost in times like these
With an eye on any new conflict developments on one hand and a decline in traditional stock markets on the other, there could be more pain ahead for the Bitcoin and cryptocurrency markets.
However, one might ask, does Israel really want to endanger itself by launching another tit-for-tat strike against Iran? Even the most ardent warmongerer must realize that there are no winners if the conflict escalates in this way.
So with that in mind, the time to buy might be when everyone else is bearish and selling. Does fortune favor the brave, or is investing in a potential war simply foolish? Fortune is won and lost in times like these.
Disclaimer: This article is for informational purposes only. It does not provide or is intended to be used as legal, tax, investment, financial or other advice.
