Bitcoin’s rising wedge could push price to $5,500 after retest of $7,000

Bitcoin’s difficulty will drop by 10-13% in the next adjustment. The main reason behind this would be the latest sell-off which contributed to a significant loss for miners. This eventually led to a drop in hash rate and hence, the difficulty needs to be adjusted as the price rises slowly.

With all this underway, the price seems to be slowly, yet steadily, rising higher. At press time, 1 BTC was trading at $6,284, with Bitcoin having a market cap of $114 billion. With the formation of a rising wedge pattern, there is a chance for the price to rise a little higher, before ultimately collapsing down to $5,000-levels.

Hourly Chart

Source: BTC/USD on TradingView

A rising wedge is typically a bearish pattern with the probability of breakout skewed towards the bears. As seen in the above chart, there is room for Bitcoin to climb a little higher and perhaps, even retest the $7,050 level. If the price gets rejected by this level, there is a chance for a bearish breakout to start. The price will start its tumble from $7,000 to $6,440, followed by $5,565, and finally the $5,364-mark.

The last level is the Point of Control which features the most trade price level in the visible range. For now, the PoC will act as the local support and the bottom. However, a dip below this could turn out to be fatal.

Additionally, the 50-DMA and the 200-DMA are converging and this drop to PoC might give birth to a death cross. This would be extremely bearish for Bitcoin.

Going back to the difficulty adjustment, the recent chaos created by the price dump has also caused an increase in Bitcoin blockchain’s block times. On 18 March, the block time took 860 secs aka 14 minutes. This is a 4-minute deviation from the normal block production time of 10 minutes.

Source: Glassnode

Conclusion

The price of Bitcoin seems to be setting up for a downturn which might push the price down to $5,500 and $5,300. Alternatively, if the price decides to trend higher, $7,000 will be the first resistance zone.