Bitcoin (BTC) looks set to drop below $30,000 in the coming months, according to a set of historically accurate technical indicators created by famed analyst Ari Rudd.
An independent market analyst published a thread on February 14 explaining why bitcoin’s continued rally — from below $33,000 on January 24 to around $42,000 on February 14 — may not have a solid foundation.
At the same time, Rudd presented at least three long-term technical fixtures with very bearish potential.
They are listed as follows:
1. Bitcoin LFG Model
Rudd Log Fractal Growth (LFG) is a Bitcoin price prediction model based on BTC fractals that consist of “logarithmic scales on both axes.” It then assesses where Bitcoin could go next based on historical price movements.
The analyst used the LFG pattern on the monthly chart of BTC/USD.
As shown in the chart below, the LFG levels represented the accumulation/allocation areas for traders during the previous bearish cycles. Therefore, Rudd points out that Bitcoin will still have to fall to its lowest level, the so-called buy zone, which reached its lowest levels during the price crash in 2018 and 2020.
BTC/USD monthly chart with LFG pattern. Source: Ari Rudd, TradingView
“We have a few months to get to the accumulation stage,” Rudd emphasized, adding that:
“The best case scenario for buying opportunities is 24K-27K levels.”
2. Tape support
As in the LFG pattern, the moving average ranges exactly coincided with the end of Bitcoin’s bear cycles, including 2018 and 2020, on a quarterly basis.
In detail, these bands are a series of moving averages (MAs) that allow traders to identify key resistance and support areas by looking at prices related to the moving average. Previously every Bitcoin trend was exhausted from top to bottom near the so-called “support range”.
The analyst suggests that the cryptocurrency is undergoing a new price correction from the $69,000 peak and that a strong drop near $33,000 could be a bull trap as the price will “retest range support on the quarterly chart.” .
BTC/USD quarterly price chart with moving average range. Source: Trading View
As a result, the moving range index risks sending bitcoin at $25,000 or less.
Weekly range resistance, RSI
Another indicator of the moving average range, but on the weekly time frame, played an important role in limiting the continued rise in the price of Bitcoin.
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Rudd suggested “strong resistance”, along with the weekly RSI for Bitcoin, which led to a further bearish trend.
BTC/USD weekly price chart with resistance band and RSI. Source: Trading View
The RSI gives traders hints of upward and downward momentum in prices. Rudd noticed that the buying momentum waned around the descending trend line of the RSI, which indicates a possible BTC/USD sale.
Meanwhile, bullish conclusion
In contrast to the bearish technical indicators mentioned above, there are many Bitcoin network indicators that give a temporary bullish outlook.
As previously reported by Cointelegraph, Bitcoin addresses holding at least 1,000 BTC have added more tokens to their balance sheets during the recent rally, suggesting that the richest crypto investors have supported the BTC bounce.
Bitcoin balance on exchanges. Source: glassnode
In addition, the number of bitcoin held on exchanges on February 13 fell to its lowest level in more than three years, according to data from Glassnode, in an ongoing downtrend that has remained unchanged since the bottom in March 2020.