Fidelity exec says Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support’

Fidelity Investments CEO Abigail Johnson said the cryptocurrency market is “technically oversold,” and $40,000 bitcoin could be a pivotal support point for prices.

The “cointelegraph price analysis” is a news article that discusses the Bitcoin market. The article states that Fidelity exec says Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support.’

The price of Bitcoin (BTC) fell below $40,000 for the first time since September 2021 earlier this week after a painful correction in the market.

Many observers expected the price to continue falling into the $30,000 to $35,000 level, but on Wednesday BTC made a sudden leap over $44,000, reclaiming $40,000 as support. This reignited optimism that Bitcoin may bottom out around $40,000 before resuming its upward trend in 2022.

Director of global macro at Fidelity Investments Jurrien Timmer referred to $40,000 as a “pivotal support,” stating that Bitcoin has been “technically oversold” close to the level, which might result in a short-term comeback.

BTC/USD price chart for the day. TradeView as a source

Three factors—a Stochastic RSI, the so-called S-curve model, and a ratio meter for Bitcoin to gold—were at the heart of Timmer’s positive forecast.

Stochastic RSI for Bitcoin has clearly risen.

The Stochastic RSI, in further detail, is a momentum indicator that evaluates an asset’s closing price in relation to its high-low range over a certain time frame. The indicator swings between zero and one hundred, with the region over 80 indicating “overbought” situations and the area below twenty indicating “oversold” ones. 

By monitoring the correlation between the high-low range’s percent K and the high-low range’s moving average, the indicator helps traders identify trend reversals ( percent D). Therefore, if the percent K wave crosses the percent D wave from below in the oversold region, the market gives a buy signal.

The same applies if the percent K line crosses the percent D line from above in the overbought region, returning a sell signal.

Timmer observes that the percent K wave of Bitcoin has been above the percent D wave, indicating a buy trend as the price has held support over $40,000.

Fidelity exec says Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support’BTC/USD price chart displaying the Stochastic RSI readings and its most recent pivot at support. Origin: Fidelity

Early on Wednesday, Timmer tweeted that “like $30,000, the $40,000 level looks to be a critical support region” and that “Bitcoin has struck a line in the sand around $40,000 and is now technically oversold.”

The S-curve price model is used.

Timmer also discovered a “demand curve” that has been helpful in forecasting the conclusion of Bitcoin’s negative cycles since 2012, as demonstrated by the pin wave in the graph below.

Fidelity exec says Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support’Supply and demand models for bitcoin. Origin: Fidelity

The curve has been serving as the same support around $40,000 since the BTC price movement bounced back from $30,000 between April and June 2021, which increases the likelihood that the next BTC recovery will reach levels close to $100,000.

Related: JPMorgan survey: Wall Street remains unsure about $100K Bitcoin this year

According to my demand model (S-curve model), the $30,000 level in 2021 offered support, Timmer noted, adding:

“It seems that the same level has increased to $40,000 and is once again providing vital support. It’s a moving objective that often acts as the price’s fundamental anchor.”

Bitcoin is oversold, according to the BTC/Gold ratio.

Regarding its price performance versus gold, bitcoin likewise seems oversold, but “moderatly.” The so-called Bitcoin to Gold ratio, as Timmer pointed out, has fallen to support at 22 after peaking twice at 37.4 in 2021.

Fidelity exec says Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support’Gold against Bitcoin Fidelity, Bloomberg, and FMRCo as sources

The decline also caused the ratio’s Bollinger Bands to cross into oversold territory, a traditional buy signal that suggests money may start shifting from the gold market to the Bitcoin market.

Overall, these charts suggest that Bitcoin should have support near $40k on both a technical and fundamental level. Although it still seems like $40k is the new $30k, it doesn’t mean it can’t fall much lower. /END

By Jurrien Timmer on January 11, 2022 (@TimmerFidelity).

The forecast matched the most recent cryptocurrency prognosis from Bloomberg Intelligence. The research, which was written by Mike McGlone, their senior commodities strategist, detected the capital movement out of the gold market and into the Bitcoin sector. McGlone also said that the tendency will persist, particularly in light of the U.S. Federal Reserve’s lax monetary policies that have led to inflation that is at a nearly four-decade high.

“We anticipate bitcoin increasing at a quicker rate, but gold likely to climb towards $2,000 an ounce by 2022,” McGlone stated. 

The author’s thoughts and opinions alone, not necessarily those of Cointelegraph.com, are conveyed in this article. Every investment and trading action has risk, therefore before making a choice, you should do your own study.

The “fidelity crypto report” is a document published by Fidelity Investments which states that Bitcoin is ‘technically oversold,’ making $40K a ‘pivotal support.’ The paper also discusses the potential for cryptocurrencies to replace fiat currencies in the future.

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