After a week or so of grinding upward, bitcoin has come back down to earth suddenly with a 9% dump so far today. Will the intense ETF buying take bitcoin back up again, or is this the beginning of a larger correction?
Bitcoin dips are usually bought back up…
Friday’s slide down as low as $65,600 possibly caught many by surprise. On Thursday a pullback had begun, which took the price down 7%, before bitcoin’s buoyancy cancelled out most of those losses. Tuesday was a similar story, with a 6% slump, which was then completely cancelled out by the following day.
We could even go back to Tuesday 5 March, when $BTC moved as much as 14.5% to the downside over the course of the day. This particular dump was then completely bought up 3 days later.
So, it seems to be a story of red candles that head rapidly down, and then a good part of these losses are cancelled out by the end of the day, leaving some relatively long wicks behind that point to probable strong institutional buying.
$BTC breaks down out of its wedge pattern
Source: Coingecko/Trading View
Looking at the very short term price action for $BTC, it can be noted that the price has fallen out of the upward-sloping wedge. Given that this was a very bearish pattern anyway, this was nothing out of the ordinary.
However, the fact that $BTC has now fallen through the previous all-time-high support at $69,000 is more of a cause for concern. The price has currently gathered itself at $67,400. If this can hold, and $BTC is able to reclaim $69,000, very little harm will have been done.
That said, if the price does continue to fall, $63,000 is the next strong area of support that would hopefully hold.
A 20% to 30% correction?
Source: Coingecko/Trading View
Zooming right out on the weekly time frame, a clearer picture is displayed. The large wick that has been left behind, and which topped at just under $74,000, is not a good sign. Therefore, it may just be that this correction does become a deeper one.
Strong support levels at $59,000, and then $51,000 are the possible targets. This would culminate in a 20% and 30% correction respectively. Both or which would be healthy and respectable pullbacks, if indeed either took place.
Selling is a risky option
For those thinking to sell, this is also a risky option. The heavy $BTC buying into the Spot Bitcoin ETFs has not paused or finished. The question has to be asked: “Would it be likely that $BTC would fall 20% to 30% with such upward pressure?”. Trade safely.
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.
