Bitcoin (BTC) price dropped severely in the previous week, falling from $19,500 to $16,000. Corrections never occur smoothly as dropdowns are frequently sudden and painful. The recent correction isn’t much different as the drop occurred in a matter of hours.
Since then, Bitcoin’s price consolidated above $16,000, which marked a temporary bottom. The primary question is whether the correction is over or not. A determining factor will be whether or not BTC price can reclaim the crucial levels that will support further upward momentum.
Bitcoin is in the middle of a weekend relief rally
As the daily chart shows, a crucial support area was established around the $16,000 area. Bitcoin’s price did lose the uptrend on lower timeframes, through which a chain reaction of liquidations occurred. This chain reaction made the price accelerate downwards.
Bitcoin’s price frequently takes the staircase up and the elevator down. When this happens, the daily timeframe marks the crucial support levels to hold, through which the zone around $16,000 is a massive area to hold.
The chart shows temporary support and bounces from this area, as Bitcoin’s price is currently $1,400 higher than the support level.
Bitcoin must break $18,000 to regain bullish momentum
The hourly chart shows a clear breakdown from the $18,600 support level, which caused the chain reaction downwards.
However, during this correction, some lower timeframe signals are showing crucial resistance levels starting at the $18,000 level. The price of Bitcoin dropped toward the support zone at $17,200, made a slight bounce upward, but couldn’t break through $18,000.
Through that failure of breaking $18,000, a resistance area is established. This resistance area needs to break to sustain the bullish momentum and then flip back bullish on the lower timeframes.
The next hurdle is found at the $18,600 area, which failed to sustain support in the previous run upward.
Total market cap is ready for more downside
The daily chart of the total market capitalization shows an apparent breakdown, as the total market capitalization dropped significantly after reaching the 1.618 Fibonacci level.
However, the bullish part is a new higher high and a breakout above the $400 billion resistance zone.
In this run-up, the massive resistance zone at $400 billion never received confirmation through a retest. In that perspective, it’s very likely to see a further correction towards $400 billion to confirm the previous resistance zone to become support.
What is a likely scenario for Bitcoin?
The most likely scenario would be a relief rally towards the $18,000 to 18,500 area. Through that, the $18,000 to 18,500 area is immediately the crucial breaker of the scenario described.
If the $18,000 to18,500 breaks, a further sustained rally toward new all-time highs is a very likely outcome. However, failing to break through this resistance zone would establish a new range.
This range is acting between $16,000 to 18,000, in which the $18,000 resistance is a confirmation of a new lower high. Lower highs indicate a downward trend, and therefore could the market expect further corrections south.
In that matter, a correction towards $14,000 isn’t unlikely at this point, as that’s the previous high in June 2019 and could warrant a massive support/resistance flip for the markets.
If Bitcoin’s price holds above $14,000, the next rally would most likely bring the price of Bitcoin above a price of $30,000.
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