Why Fears of Correction Still Dominate the Bitcoin Market Despite Big Rally

Bitcoin staged a sharp price rally this Tuesday as speculators continued to assess the likelihood of a full-blown military conflict between the US and Iran.
The benchmark cryptocurrency established a seven-week high of $8,000 on Coinbase, its best level in seven-weeks. The move upside brought its weekly gains up by 10.27 percent. The bitcoin futures trade, too, noted moves towards $8,100 after the price rally in the spot market.

It might be time to get out of Bitcoin’s way.
— The Wolf Of All Streets (@scottmelker) January 6, 2020

Fundamentals Overview
Bitcoin’s gains coincided with similar upside movements across the traditional haven assets. Precious metal Gold yesterday hit its best levels since April 2013. At the same time, global benchmark Brent Crude Oil surged to reclaim its eight-month top albeit correcting downwards during the daily sessions since Monday.
Warren Patterson, head of commodities strategy at ING, told Financial Times that investors are gauging their sentiments on how Iran may retaliate to last week’s US drone attack. Meanwhile, their focus remains affixed to the signing of “phase one deal” on January 15 which may boost risk-on investments.
But that does not concern bitcoin one bit, at least according to Peter Schiff. The Euro Pacific Capital CEO highlighted the cryptocurrency as an offbeat asset driven largely by speculation, noting that no institutional investor is buying it as a safeguard against the US-Iran conflict.

Both #gold and #Bitcoin are up about 4% so far in 2020. Yet while gold stocks indexes are actually slightly lower on the year, GBTC, a publicly traded Bitcoin trust, is up almost 10% on the year. So, while gold stock investors are skeptical, GBTC investors are widely optimistic.
— Peter Schiff (@PeterSchiff) January 6, 2020

“Retail investors in GBTC are more bullish on Bitcoin than actual Bitcoin buyers,” tweeted Mr. Schiff. “It’s a good contrarian indicator that Bitcoin prices are likely to fall.”
Bitcoin Technicals are Bearish
While bitcoin’s latest price rally certain pushes it above crucial resistance levels, the cryptocurrency is still trending inside a very bearish channel, as shown in the chart below.
Descending Channel in Bitcoin Daily Chart | Source: TradingView.com, Coinbase
The bitcoin-to-dollar exchange rate continues to trend downwards in the greened Descending Channel pattern, confirmed by the formation of lower lows and lower highs. A broader outlook shows the pair reaching out to the upper trendline of the Channel. It is the same ceiling that has rejected bitcoin’s upside attempts on multiple occasions since June 2019.
That being said, optimists could enter a fresh long position towards $8,369-$8,500 range. At the same time, they could maintain their risks by placing a stop-loss order below the level at which they have opened the long position.
Meanwhile, a pullback accompanied by a volume boom could have traders open a short position towards $7,280 for a decent profit. A break below the said level could extend the downside target towards $6,500. The post appeared first on NewsBTC.