That Dreaded Candlestick Pattern Just Printed: Bitcoin at $18,000?

Bitcoin, the most valuable crypto asset, is at a critical point in spot prices judging from the weekly chart’s candlestick formation. One analyst on X, former Twitter and NewsBTC editor Tony Spilotro, is hit the alarm after figuring out the bearish head and shoulders pattern on the weekly chart.

Will Bitcoin crack?

Although the pattern is technically in the final stages of formation, if realized it could wreak havoc on bitcoin bulls as it pushes prices below a multi-month critical support line towards $18,000 in the coming weeks or could press below. Still, the volatility in crypto and BTC prices means traders should take a wait-and-see attitude until the pressure dies down.

Bitcoin head and shoulders weekly chart| TradingView

Bitcoin has been stable since August 15th and is in a broader uptrend from a top-down perspective. Notably, the coin is within the trading range set between June and July 2023 as visible on the daily chart.

Despite the general optimism of a price rally above the July 2023 highs, BTC moved sideways, holding above the $28,000 support level but below the $31,800 recorded in the closing days of H1 2023. Any break above $32,000 on increasing volume could fuel demand and anchor gains towards $35,000 or more.

Bitcoin price on August 15| Source: BTCUSDT on Binance, TradingView

While the inability of the sellers to drive prices lower is a positive, at least from a buyers perspective, the possible formation of the weekly chart’s head and shoulders pattern casts a shadow of doubt on the bullish outlook. Thereafter, traders remain cautiously optimistic as the candlestick rule, particularly on the weekly timeframe, suggests a vulnerability that could weigh on market sentiment and hopes for sustained growth.

Rate hikes and halvings: which will have a bigger impact?

Several fundamental factors are further complicating the Bitcoin price outlook in the coming days. Inflation is relatively high in the United States (compared to the 2% policy rate), which could prompt the Federal Reserve to continue raising interest rates in the third and fourth quarters of the year.

Despite relatively stable working conditions and somewhat subdued inflation, the Fed youngest Rate hikes, currently between 5.25% and 5.50%, underscore the central bank’s commitment to containing inflation and maintaining economic stability.

The potential impact of the Federal Reserve’s restrictive crypto policies are reminiscent of events in 2022, when Bitcoin collapsed, falling from its 2021 peak to below $16,000 in late 2022, although a crisis in 2023 and beyond may be a possibility , analysts still consider it a “risky” investment.

From a bullish perspective, Bitcoin will halve its miner rewards from 6.25 BTC in 2024. This reduction could trigger a supply shock that makes BTC more scarce and could support prices in the second half of next year.

Featured image by Canva, chart by TradingView

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