FX.co ★ Bitcoin may still experience "parabolic rise"; what does Bitcoin Taproot upgrade have to do with it?

Bitcoin continues to decline on Friday. But an unclosed bearish daily candle is a shaky benchmark for analysis. There have been no fundamental technical changes since Thursday: support at 62,637.96 may turn out to be the lower border of a new sideways consolidation range.

The second presumed technical scenario is the formation of an upward channel. The second minimum, at which the support line can be drawn, has not yet been formed. But if we assume that this border will be parallel to the resistance of the two rising highs (although this is not true, let's assume), then the correction could go deeper into the area of $60,000-$61,000 per coin.

Profit-taking or fundamental pressure?

Such a beautiful bearish engulfing on the daily chart is more of a sign of profit-taking by buyers. And the correction was strengthened by the removal of part of the long positions opened with the leverage. The situation is familiar and has been discussed by us here more than once.

Although, in support of Thursday's assumption, asset management expert from Tellurian ExoAlpha confirmed the likelihood of the hype about the China Evergrande financial crisis on some digital assets, including Friday.

He believes that the news from Evergrande is causing a violent reaction in the digital currency ecosystem as a whole, but this is only a temporary phenomenon and preparation for a rebound to new highs.

Well, here we seem to agree.

Inflation shock and BTC update: there is every chance for growth

I will not repeat once again that inflationary pressure is one of the factors urging institutional investors to flee to bitcoin. This topic has been covered many times. One has only to recall the latest data of this week - the growth of the consumer price index (CPI) in October exceeded 6.2%. This, among many other factors, could push even private investors to invest in bitcoin as a way of hedging investment portfolios from this inflationary surge.

The discussion of the parabolic rise of the main cryptocurrency against the background of the upcoming update will become more interesting.

Analysts compare the current bull cycle since the previous halving with the previous ones and note that the market has not yet experienced the final parabolic rally. Although the situation is not identical to the 2013 or 2017 rallies, the foundation is still being laid for this so-called "parabolic takeoff."

In terms of local news, not only a final decision is expected on Sunday on whether or not filing a spot Bitcoin ETF in the US will be allowed. The fate of blocking the Bitcoin Taproot soft fork will also be decided.

"The last time bitcoin underwent such a major update was the Segwit update in August 2017. Bitcoin was priced at $4,000 at the time and then surged to nearly $20,000 over the next four months," noted Decentrader analysts, who suggest the update could trigger a new surge in volatility.

"Will we see a similar rally this time? Considering how optimistic many macro indicators look right now, as well as the influx of new funds into the cryptocurrency, this is certainly possible."

Against this background, BTCUSD volatility may increase over the weekend. But for now, I leave the actual technical guidelines on the chart. They may have to be updated from the next week.