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⚡Megaphone Pattern Poses Downside Risk🍘

Croxroad

09 Sep 2024 — 4 min read

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⚠️ Expanding Triangle Risk

Veteran trader Peter Brandt has issued a warning regarding Bitcoin (BTC) as the cryptocurrency forms a bearish chart pattern on its weekly time frame. Brandt, speaking to his 737,000 followers on the social media platform X, highlighted the development of an inverted expanding triangle pattern, also known as the "megaphone." In technical analysis, this pattern can signal either bullish or bearish outcomes, with the former occurring if the price breaks above the upper boundary and the latter if it falls below the lower boundary. Brandt predicts that a test of the lower boundary could result in a 19% drop, bringing Bitcoin's price down to around $46,000.

According to Brandt, Bitcoin's current market dynamics reflect stronger selling pressure than buying activity within the expanding triangle, which could delay a potential return to new all-time highs. He emphasises that a significant upward thrust is needed to reignite the bull market. Meanwhile, another prominent voice in the crypto space, analyst Ali Martinez, offers a more optimistic perspective. Martinez, addressing his 70,300 followers on X, notes that while September has historically been a challenging month for Bitcoin, October often brings a reversal in fortunes. Referring to it as "Uptober," Martinez points out that October is traditionally one of the best months for Bitcoin’s price performance.

The contrasting views from Brandt and Martinez reflect the ongoing uncertainty surrounding Bitcoin’s near-term trajectory. While the bearish triangle pattern suggests potential downside risk, historical data indicating strong October gains offers hope to Bitcoin bulls. The divergence in expert opinions underscores the volatile nature of the cryptocurrency market, where technical patterns and historical trends can clash in predicting future movements.

🇸🇻 A Taxi Driver’s Journey to Wealth

In San Salvador, El Salvador, Napoleon Osorio has become a notable success story thanks to the country's bold decision to make Bitcoin legal tender. As the first taxi driver in the world to accept Bitcoin payments in the pioneering nation, Osorio credits President Nayib Bukele’s 2021 initiative with transforming his life. Once unemployed, the 39-year-old now runs a successful business, using Bitcoin through an app for his rides and operating his own car rental company. His business has flourished, allowing him to purchase four vehicles and support his children's education, thanks to the cryptocurrency's appreciation.

Three years ago, President Bukele took a significant risk by introducing Bitcoin into the national economy, aiming to invigorate El Salvador’s dollarized, remittance-dependent financial system. Despite global warnings about Bitcoin’s volatility, Bukele invested heavily in the cryptocurrency and created the Chivo Wallet app, offering $30 in Bitcoin to new users. While Osorio and a few others have reaped the benefits of this initiative, the broader population’s adoption has been lukewarm. A study found that 88% of Salvadorans have not used Bitcoin, and only 1% of remittances were sent using the cryptocurrency in 2023.

Bukele acknowledged the slow adoption of Bitcoin in an August interview, recognizing that while Bitcoin payments are available at various businesses, it has not met the widespread use he had hoped for. He maintains that Bitcoin use remains voluntary, and those who embraced it have seen benefits. However, the IMF’s hesitation to lend funds and mixed market performance of Bitcoin have tempered the enthusiasm surrounding the initiative. Economists point out that by limiting Bitcoin’s use and stripping it of traditional monetary functions, Bukele may have impeded its broader acceptance. Despite these challenges, educational efforts, such as those by My First Bitcoin, continue to address the public’s fears about transitioning to a digital and decentralised currency.

🧑‍🏭 How Does Bitcoin Work?

Bitcoin operates on a decentralised public ledger known as the blockchain, where every confirmed transaction is recorded in 'blocks' and distributed across a peer-to-peer network. This system ensures transparency and prevents issues like double-spending by making all transactions visible to users, thus fostering trust in the network.

Unlike traditional currencies, which are regulated by central banks, Bitcoin lacks a central authority. Instead, it relies on a distributed network of computers, similar to file-sharing systems like BitTorrent or communication networks like Skype. Bitcoin is generated through a process called mining, where these computers solve complex mathematical problems. The system is designed so that mining becomes progressively harder, capping the total number of Bitcoins at around 21 million. This limit prevents the devaluation of Bitcoin through overproduction, a key distinction from traditional fiat currencies.

🤣 Crox Road Memes

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