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Quick grip:
- Timothy Peterson pointed out that Bitcoin is in “bubble territory”
- It also warns of a possible 20% drop in the value of BTC
- Bitcoin failed to claim the $ 16k price area as support
- An ascending wedge on the 6-hour chart could signal the start of a possible correction
Timothy Peterson of Cane Island Alternative Advisors shared his most recent analysis of Bitcoin (BTC). According to Mr. Peterson, Bitcoin has entered “bubble territory”. He explained that this was due to Bitcoin’s 30-day yield exceeding a certain address growth threshold, as shown in his tweet below.
The average withdrawal after each of these bubbles is 20%.
– Timothy Peterson (@nsquaredcrypto) November 14, 2020
Average drawdown of 20% in such bitcoin bubbles
He also added that Bitcoin usually takes a 20% withdrawal once it enters bubble territory. This means that Bitcoin could drop significantly in the $ 12,800 price range using an average value of BTC at $ 16,000. His analysis reinforces a precedent in which he pointed out that Bitcoin could be overpriced by a factor of 20% to 50% and using Metcalfe’s law. His analysis can be found below.
#Bitcoin it’s 20-50% overpriced. pic.twitter.com/8K9qzjAT92
– Timothy Peterson (@nsquaredcrypto) November 5, 2020
Bitcoin fails to turn the $ 16k price area into support
In terms of price, Bitcoin is once again setting another weekly close in a few hours. The BTC / USDT newspaper is still pointing towards an overbought situation for Bitcoin after The King of Crypto recorded a 2020 high of $ 16,485 yesterday, Friday, November 13th.
For the somewhat superstitious cryptocurrency traders, Bitcoin, which releases a peak value on Friday the 13th, could herald the start of a correction for BTC. Additionally, Bitcoin has formed what appears to be an ascending wedge pattern over a 6 hour timeframe, as illustrated below.
The following can also be seen from the graph.
- Bitcoin’s present value at $ 15,900 is at the lower bound of the rising wedge
- A break of this wedge could bring the price of Bitcoin down to the $ 15,400 price area
- Other support areas for Bitcoin include levels found at $ 15k, $ 14,800, and $ 14,300
- The 6-hour MACD, MFI and RSI all point towards a continuing correction for Bitcoin
Conclusion
To sum it up, Bitcoin had an impressive run for nearly 6 weeks from the $ 11,000 price level to yesterday’s high of $ 16,485. Timothy Peterson of Cane Island Alternative Advisors then warned that Bitcoin has entered “bubble territory” and could be set for a 20% pullback.
A quick glance at the 6-hour Bitcoin chart reveals that there is a rising wedge that could very well collapse and mark the beginning of the aforementioned correction.
As with all Bitcoin analysis, traders and investors are advised to use adequate stop losses and low leverage when trading BTC on various derivative platforms.
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