Bitcoin’s (BTC) price has been in retreat, down 20% since the recent all-time high at $62,000 in mid-March. As crypto markets are frequently volatile, this may very well be another normal pullback within the current bull cycle.
Corrections are needed to generate strength for further upward momentum as markets can’t go up in a straight line. Additionally, a record $6 billion expiration of options is expected on March 26, which often brings some volatility.
It is also quite common for the market’s momentum to shift momentum once the options expiration date comes and goes.
$53K level has to become support to gain bullish momentum
The 4-hour chart shows an apparent downtrend since the recent all-time high at $62,000 with bearish support/resistance flips.
Regardless, Bitcoin’s price has rejected the critical resistance zone at $56,500 in the latest rally after Tesla announced it has started accepting (and holding) BTC in the United States for its vehicles. As that price level couldn’t break for more upside, renewed tests of the $53,000 support zone were inevitable.
Given that the $53,000 support zone has been tested multiple times in recent weeks, it became likely that this level may not hold this time around. Therefore, the price collapsed on March 25 and dropped to as low as $51,500.
Hence, Bitcoin’s price must now regain the $53,200-$53,800 area to revive any bullish momentum in the near term. If that doesn’t happen, it’s likely to see more downside to the next support zone between $49,500 and $51,500.
Overall structure still heavily bullish
The daily chart for BTC/USD still paints a bullish outlook showing consistent higher lows and higher highs. In that perspective, a correction to as low as $44,000 would still mean that the bullish construction remains valid.
In that regard, Bitcoin’s price currently has massive support between $49,500 and $51,500 and is unlikely to fall further.
Additionally, the bearish divergence isn’t confirmed until the market starts to make lower lows and lower highs below $44,000, as previously stated.
Dollar showing strength
The U.S. Dollar is showing strength once again as the yields are also running up substantially. So it’s not surprising to see risk assets falling, namely commodities and cryptocurrencies as well.
A rebounding USD is typically bearish for crypto markets, particularly in the short term. But this latest uptick in the dollar is likely temporary because it’s entering strong resistance. Moreover, the structure still shows lower lows and lower highs, meaning that a trend reversal should be expected relatively soon.
Thus, if the dollar’s momentum is halted, more upside for Bitcoin and the cryptocurrency market becomes likely.
A possible scenario for Bitcoin
The 4-hour chart for Bitcoin shows a downtrend, in which a retest of the $53,200-$53,800 region will likely be rejected. Therefore, more downside is the most likely scenario in this current price construction in the near term.
The green zone shown in the chart above is the area to watch for a potential bullish divergence or immediate bounce. If such a move occurs, the ideal scenario for the bulls would then be to establish a higher low.
Once such a higher low is established, Bitcoin’s price will be primed to continue climbing with the next points of interest at $68,000 and $82,000.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.