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Benzinga
Benzinga
Business
Melanie Schaffer

Did Bart Simpson Predict Bitcoin's Fall? What To Watch As The Crypto Retraces

Bitcoin (CRYPTO: BTC) was trading down over 6% on Thursday afternoon, giving back almost all the gains the apex cryptocurrency made the day prior when it shot up 8.2% to close the 24-hour session at $41,953.97.

Volatility has returned the crypto sector recently amid turbulence in the general market, caused by the increasing geopolitical risk brought on by Russia’s invasion of Ukraine, rising inflation and the impending rate hike that is expected to be announced following the Federal Reserve’s monthly meeting on March 16 and March 17.

The rise on Wednesday can be attributed to an executive order signed by President Joe Biden that aims toward overseeing digital assets. The order was viewed as relatively benign and lacked any specific positions or regulations the government may eventually impose.

The decline on Thursday may be due to technical factors: on Wednesday, Bitcoin was unable to close the day above a support and resistance level at the $42,223.66 level, which may have caused bullish traders to grow weary that the crypto was losing momentum.

See Also: How to Buy Bitcoin In 4 Easy Steps

The Bitcoin Hourly Chart: Technical traders may have predicted the large drop in Bitcoin’s price was on the way because between 11 p.m. EST on March 8 and 7 p.m. on March 9, the crypto had started to show signs it was printing a bearish "Bart Simpson" pattern.

A Bart Simpson pattern, usually found only on crypto charts, is characterized by a trading pattern that takes the shape of the famous cartoon character's head. It consists of a sharp rise in the price of the security that's followed by sideways trading below a key resistance level, representing distribution, which in turn is followed by a sharp decline in price.

The steep decline began at 8 p.m. and lasted until midnight on Thursday. Since that time, Bitcoin has been trading sideways between about $38,500 and $40,200. It's possible the crypto may now be forming into an inverse Bart Simpson pattern, which if recognized could indicate another large move to the upside is on the way.

The Bitcoin Daily Chart: Bitcoin has been trading in a horizontal pattern on the daily chart since Jan. 5, with all of the volatile price action taking place between about $33,000 and $45,800. On Thursday, although the crypto broke slightly below Wednesday’s low-of-day, Bitcoin could still be considered to be trading in an inside bar pattern, which would lean slightly bullish because the crypto was trading higher before forming the pattern.

Both bullish and bearish traders can watch for a break of the inside bar on Friday to gauge future direction, although there is a possibility, due to the large trading range, that the crypto may form a double inside bar pattern before breaking.

Bitcoin is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending slightly below the 21-day, both of which are bearish indicators. The crypto has also lost support of the 50-day simple moving average, which indicates longer-term sentiment has become bearish.

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  • Bulls want to see big bullish volume come in and push Bitcoin back up above the moving averages, which would make a bullish break from the inside bar pattern more likely, there is resistance above at $39,600 and $42,233.66.
  • Bears want to see big bearish volume come in and drop Bitcoin down to close the trading session below Wednesday’s low of $38,655.98, which will negate the inside bar pattern. Below the level, there is support at $38,105 and $35,593.22.

See Also: Bye-Bye Bitcoin? 'Rich Dad Poor Dad' Author Sees US Seizing All Crypto After Biden's Executive Order

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