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Veteran trader Peter Brandt recently highlighted an intriguing pattern that is now building on the Bitcoin chart, prompting interest and discussion among traders and investors.
Brandt tweeted a screenshot of the four-hour Bitcoin price chart, indicating an ascending trendline and what appears to be a head-and-shoulders pattern gradually emerging.
Brandt's post caught the attention of an X user, who inquired whether it was a "head and shoulders" formation, to which Brandt replied, "Starting to shape up that way."
The head and shoulders pattern is a well-known technical indicator that predicts a trend reversal. It is distinguished by three peaks, the middle peak (the head) being the highest and the two outside peaks (the shoulders) being lower and about equal in height. When this pattern follows an upward trend, it is usually considered a bearish reversal indicator.
The validation of such a pattern might suggest that Bitcoin could be on the cusp of a price correction following its recent bullish run. This could potentially offer a strategic entry point for investors looking to buy at lower prices.
Tomiwabold OlajideAs the crypto community watches Bitcoin's price with bated breath, the precise implications of the identified pattern remain subject to interpretation. Whether it will lead to a bearish reversal or defy expectations remains to be seen.
Options indicate Bitcoin traders might be preparing for price reversal
Bitcoin has fallen about 13% from its current all-time high of $73,750, marking one of the most significant declines this year.
At the time of writing, Bitcoin was down 1.71% in the last 24 hours to $64,318 and down 6.68% for the week. The Bitcoin pullback contrasts with this week's stock market rise, in which traders are more optimistic that the Federal Reserve will lower interest rates this year.
Options indicate that traders are ready for an extended decline in Bitcoin as demand for U.S. exchange-traded funds with exposure to the cryptocurrency begins to fade.
Bitcoin put options expiring on March 29 have outperformed call options in volume, pushing the put-to-call ratio, a crucial indication of market sentiment, higher, signifying a bearish view in the short term, according to Bloomberg, citing Deribit data. The strike prices of puts range between $50,000 and $45,000, which is lower than Bitcoin's current price of roughly $64,000.
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