Bitcoin’s (BTC) price has been in a downward trend following a recent surge to $72,000. A surprising 4% correction over the past few days has caught traders off guard, leading to speculation about the market’s next move.
Recent Bitcoin Price Movements
Bitcoin is currently down by 2.5%, surprising traders who were anticipating new all-time highs after a rally earlier in the week. Data f shows that leveraged long traders were particularly impacted, with the price dropping from $71,980 on May 21 to an intra-day low of $67,550.
#Bitcoin is still following a similar path to 2016-2017.
Once that 2021 ATH breaks, there will be no stopping the king.
Bring on $100,000. pic.twitter.com/BxEG628J8y
— Jelle (@CryptoJelleNL) May 23, 2024
Independent analyst Jelle noted that Bitcoin’s price action continues to follow a pattern similar to the 2016-2017 cycle. Jelle predicts that Bitcoin could enter a parabolic uptrend and reach $100,000 once it surpasses the 2021 all-time highs. Analyst Mags suggested that the current correction might be a “fake out,” a common pattern where Bitcoin consolidates, breaks down, traps bears, and then quickly reclaims its previous levels before moving higher.
Technical Analysis and Market Sentiment
Jelle highlighted that Bitcoin recently broke through all key resistance levels, including the 50-day exponential moving average (EMA) at $64,665. This breakout has created a “hidden bullish divergence,” indicating potential for further upside.
Another analyst, Matthew Hyland, pointed out that Bitcoin is close to retesting the demand zone between $64,000 and $67,000, which aligns with the neckline of an inverse head-and-shoulders pattern. Hyland emphasized that a retest of the breakout at $67,000 would not be alarming and that the overall structure remains bullish on a higher timeframe.
The popular analyst Wolf Of All Streets shared a chart indicating that bulls need to maintain support at $67,000, suggesting a trading range between $67,000 and $73,835. This range offers a high risk-to-reward ratio for traders looking to buy in at the current levels.
Ethereum ETF Approval and Its Influence
The recent approval of eight spot Ethereum ETFs by the SEC has also influenced Bitcoin’s market dynamics. The SEC approved filings from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. These ETFs will trade on major exchanges, including CBOE, NYSE ARCA, and NASDAQ.
This approval has drawn investor attention towards Ethereum, temporarily overshadowing Bitcoin. This shift in focus has contributed to Bitcoin’s recent price correction. The approval of Ethereum ETFs is seen as a positive development for the broader cryptocurrency market, indicating the growing acceptance of digital assets by regulatory authorities.
Outlook and Key Levels
For Bitcoin to resume its uptrend, it needs to hold above critical support levels. The current price action shows Bitcoin trading around $67,900, just below the 2021 high of $69,138. To confirm a bullish continuation, Bitcoin must break and sustain above the psychological level of $70,000.
Technical indicators such as the Relative Strength Index (RSI) and the Awesome Oscillator support the bullish outlook. The RSI is above its mean level of 50, and the Awesome Oscillator remains above zero, indicating that bullish momentum is still in play.
However, failure to hold above $70,000 could lead to a retest of support at $64,000. A further drop below this level could invalidate the bullish thesis and attract selling pressure, potentially pushing Bitcoin down from $59,111 to $53,120.
Moreover, according to analysts, every time the TD Sequential indicator has shown a buy or sell signal on the Bitcoin daily chart since February, it has led to significant price movements. Consequently, as the indicator flashes a sell signal, a bear rally may be looming.
