Important facts:
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According to analysts, Bitcoin could reach $40,000 within the next 30 to 120 days.
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After reaching the $40,000 mark, according to Ward, there would be a significant drop in price.
Bitcoin (BTC) traded at its yearly high of over $30,000 four weeks ago, posting a 100% rebound from 2022 lows. That begs the question, according to analyst Justin Ward: is it worth factoring in? Is this step serious or is it perhaps a cop trap?
In trading, a bull trap is a financial strategy of a market sector that causes an asset’s price to rise temporarily to entice investors to buy, but then fall sharply, trapping those who bought at the peak.
Ward, an attempt to answer whether or not we’re in a cop trap introduce that Bitcoin’s surge over the past month has been fueled by requests from BlackRock, Fidelity, and other companies set up listed investment funds (ETF) for spot bitcoin in the United States.
He noted that as “these heavyweights” were chasing a bitcoin ETF, it’s safe to assume that the authorities would eventually give in. As CriptoNoticias reported, the US Securities and Exchange Commission (SEC) has rejected applications for funds of this type in the past.
Against this background, Ward argues: “We don’t have a crystal ball, but we can imagine that as the pressure for some form of regulation mounts, positive news on this front will make this breakthrough a reality.”
On a technical level Bitcoin is expected to reach a higher price in the $40,000 range, based on the three-wave structure, Ward said. And he emphasized that in the past this indicator helped him to correctly predict the decline of the cryptocurrency.
It should be noted that the three-wave theory in price analysis refers to a rise followed by a fall and then a rise to a new high. This is true when it’s bullish, while vice versa when it’s bearish.
The analyst explained that after hitting the all-time high of $69,000 in 2021, using a bearish three-wave structure, he was able to see that a break below $32,000 would lead first to a target of $14,900 and then to $10,000 US Dollar would lead if there were no target signs of a downtrend reversal. And indeed, BTC fell to a price level close to the first target, precisely $15,000, before changing direction to the upside.
Ward showed in the chart below that now, seven months after the fund’s strong rejection move, the possibility of a third wave of surge is opening up. These are the first wave from the low of $15,000 in November last year through April when it first touched $30,000, and the second wave, which dropped to $25,000 from there. With Bitcoin now trading back at $30,000, if the price breaks this rejection line, we would expect the market to see the third wave.
Ward mentioned that there may be a third wave attempt as it has surpassed the rejection it showed at $30,000 this year. “If this move holds, we can wait for $40,000 first and then $46,000 before seeing the $15,000 region again,” he said, as such numbers have historically represented support and resistance zones.
In any case, the analyst clarified, “He is aware that a positive regulatory move could be a factor in both sustaining the wave and the speed at which it could reach its goal.” In response, he mentioned that he I expect the cryptocurrency to hit $40,000 in the next 30-120 days. As per the analysis, this is not a “bull trap” but a rally based on BTC fundamentals.
And after a third rising wave, sees a return to $15,000 as a possibility Because according to the three-wave theory, the market can search for the point since the first wave started as a test.
What is the theory of the three waves?
Like other indicators, the three-wave theory was developed in order to be able to identify the likely price development of a financial instrument. The basis for this is that a financial market cannot sail up or down without making waves.
This theory posits that waves are essentially a mismatch between buyers and sellers that sets a likely price direction and target. In this sense, in a bullish sense, a wave one is considered to transition from a bottom to a top where it finds a rejection large enough to form the falling wave two and overcome it with wave three.