The price of Bitcoin fell through $600 over the weekend and has continued lower to support around $550. The chart shows a descending triangle pattern, which is usually bearish and suggests a continuation of the prevailing trend direction. The pattern suggests that if support at $550 fails, a much deeper dive below $500 can be expected in the coming days.

bitcoin technicalsHowever, if support at $550 holds and a new uptrend develops, this would largely negative the bearish pattern. If we zoom in on the chart to the last few days, we can see that support at $550 has held on three separate occasions.  Bitcoin has rallied from $550 to $565 and all eyes should be focused on short-term resistance at $570. This level is key because it acted as support multiple times on March 21 and 22, before turning to resistance multiple times over the past few days. If the price can climb back above $570, there is a good chance of it turning into support once again and a new uptrend developing.

bitcoin stThose looking to purchase bitcoins may want to consider waiting for either a break below $550 or strong move above $570. Whichever occurs first and holds for a few days will likely determine the future direction of the price.

My expectation is that Bitcoin will continue to find support around $550, which will prove to be a bottom once again. I believe increased awareness, adoption and usage of Bitcoin coupled with limited supply, will force the price back above $1,000 by year end. If I am correct, this represents upside potential of nearly 100%.

Geopolitical tensions, increasing distrust of governments and banks and an overall trend toward decentralization are other factors that should be supportive of the Bitcoin price going forward.

On the downside, Bitcoin novices and newbies may be dissuaded by the technical complexities and continuing string of thefts at major exchanges. Western governments and their banking masters may also turn up the heat on Bitcoin, attempting to limit its usage through legislation, lawsuits and media propaganda. So, one can’t rule out a sharp correction in the near future if support at $550 fails. I think it will be short-lived if it happens, providing an excellent opportunity to buy the dip.

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