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As Bitcoin price continues to hover around $119,000, investors are waiting for the right time to join a new bull rally. However, current levels pose a dilemma for investors: Should they enter now or wait for a better pullback?
Is $111,673 the Optimal Entry Level for Bitcoin Bulls?
10x Research founder Markus Thielen offers a clear answer to this question. He argues that Bitcoin's $111,673 level, which acted as resistance in May and has now become support, could be the entry point offering the best risk-reward ratio for investors.
“We would prefer Bitcoin to retest the $111,673 breakout level. This level would offer a better risk/reward ratio,” Thielen said in a note to clients on Monday.
The risk-reward ratio helps investors determine whether to enter a position by comparing the potential loss of an investment to the potential gain. A 1:2 ratio is typically targeted; that is, an investor aims for at least 2 units of return for 1 unit of risk. This makes entries near support levels attractive for bullish trades.
But what if the expected pullback doesn't materialize? According to Thielen, a break above $120,000 could signal a market re-entry. Specifically, this level would represent a break of the falling trendline connecting the July 14 and July 23 peaks.
“A sustained rally, especially above $120,000, could justify repositioning with the trend. However, stop-losses would need to be kept quite tight in this situation,” Thielen says.
At the time of writing, Bitcoin was trading sideways around $119,500. The rally, which gained over 1% on Sunday, was fueled by news of the signing of the largest trade agreement in history between the US and the European Union.
In light of technical analysis, two levels stand out for investors to watch carefully: $111,673 is the ideal support point for a healthier entry, while $120,000 stands out as a potential breakout level that indicates the trend is gaining strength again.
*This is not investment advice.