Bitcoin Price Pennant Predicament Could Sweep $40,000, Is This the Dip Before the Rip?

The crypto market is quickly erasing the gains accrued since mid-week when the Federal Open Market Committee (FOMC) kept interest rates unchanged in the range between 5.25 to 5.5%. In his remarks, Jerome Powell, the Fed Chair, announced 3 rate cuts in 2024.

This announcement, highly welcomed by investors, triggered widespread rebounds, with Bitcoin briefly rising above $43,000.

Altcoins followed in BTC’s footsteps with some majors like Solana (SOL) and Cardano (ADA) posting double-digit gains. Although Ethereum price climbed higher, it quickly retraced from resistance at $2,300 to $2,236 at the time of writing.

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Bitcoin Price At Crossroads, What’s Next?

The recovery from support at $40,000 formed a pennant pattern in the process, whose validation is contributing to the current overhead pressure. A pennant can either be bullish or bearish.

In Bitcoin’s case, a bearish pennant threatens to spur a drop to $40,000. Many traders are likely to have faced liquidation on their long bets to $45,000 and possibly $50,000.

However, the fact the uptrend weakened below $44,000 resistance could have been interpreted to signal a possible swing low before the next major breakout. At the same time, Bitcoin price slid below the 20 Exponential Moving Average (EMA) (in blue), reinforcing the short-term bearish theory.

Bitcoin price also dropped below 50 EMA (in red) and is looking to successfully test support at $41,500. If declines overshoot this area, the next key region at $40,500 will come in handy but even so, it would be too early to rule out another retest of the $40,000 support.

Crypto analyst @CryptoBusy expects Bitcoin to create lower lows as long as it is trading in the range between $43,500 and $40,300.

Bitcoin Supply On Exchanges Dwindles

According to blockchain data shared by James Van Straten, the lead analyst at CryptoSlate, BTC left on exchanges ranges somewhere between 1.8 and 2 million.

In his opinion, BlackRock might scoop at least 1 million BTC to support its Bitcoin spot exchange-traded fund (ETF) bid.

Moreover, there are 11 more ETFs with the Securities and Exchange Commission (SEC), excluding public companies “that are now incentivized by FASB to adopt fair value accounting.”

The dwindling supply on exchanges coupled with 78% of the total supply being illiquid could further drive Bitcoin price.

The halving in April 2024 will also impact Bitcoin supply—a situation likely to trigger an unprecedented bull run.

For now, traders will look forward to BTC rebounding from support at $41,500 while speculating on the next move above $44,000.

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