After the ‘sell the news’ event of the Spot Bitcoin ETF approvals, the bitcoin price did take a substantial hit. However, many analysts are expecting $BTC to correct a lot further. Will they be right, or does the market have a trick up its sleeve?
Bitcoin to confirm its base price structure?
Is it now the expectation that bitcoin has achieved its high, and that all that is left for the next weeks and months is for the king of the cryptos to continue to reverse in price, until the expected 30 to 40% correction has been fulfilled?
This certainly is a possible path for bitcoin. All previous bull market cycles saw $BTC return to confirm its base price structure before continuing its upward momentum, so why should this one be any different?
If this is the scenario that bitcoin is going to take, then $30,000 is a reasonable prediction for this drawback. $34,000 is also a possibility given that this would see the price being held by the 0.618 fibonacci.
$BTC price still holding supports
Source: Trading View
That being said, at least for now, $BTC is still holding above a trend that can be drawn from the end of August 2023. Although, the price did not get above this trend line until October. Nevertheless, the current price also coincides with strong support that stretches all the way back to early 2021, so breaking this support could be very decisive.
Weekly momentum indicator close to resetting
On another note for bitcoin, the much longer term weekly stochastic RSI is now coming down fast. While this does indicate downside momentum, and could be indicative of a large negative price move to come, if $BTC can resist this momentum, once the stochastic RSI hits the bottom, it would then be reset and can then switch to start indicating positive price momentum as the indicator starts rising again.
The Stochastic RSI on the weekly time frame generally takes around 6 months to go from the bottom, to the top, and back to the bottom again. It last hit the bottom at the end of August 2023, and looking at its current trajectory, it could hit bottom again in early February, which is only around two weeks away. Once there, the indicator could bounce straight up, or stay at the bottom for a while, but if this were the case, it usually wouldn’t stay there for more than three or four weeks at the most.
We are therefore at a most significant juncture for $BTC. At time of going to press the price is threatening to break below those strong supports mentioned above. Those trading should do so carefully while paying full attention to risk management.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
