Bitcoin (BTC) has halted its bull run in the past few weeks as the price has corrected from an all-time high of $58,000 to around $43,000.
Several arguments were found for the pullback, including a sell-off from miners and whales. The other primary reason for the correction is the sudden surge of yields across the world.
Downtrend remains intact since $58,000
The 2-hour chart for Bitcoin shows a clear downtrend since the peak high in February at $58,000. Since then, bearish support/resistance flips have been happening suggesting further weakness in the near term.
This bearish support/resistance flip has happened at the $55,000 and $52,000 levels, with the latter serving as the current major area of resistance.
In recent days, Bitcoin’s price tried to break through this resistance zone but failed to do so. After such a failed breakout, retesting the levels below seems inevitable.
In that perspective, the critical support zone to hold for Bitcoin is the area between $48,300 and $48,800. As long as those hold, a renewed test of the $52,000 zone could happen.
Failing to hold the support zone and the range low (green area) is likely to receive a renewed test. Hence, the correction doesn’t seem over for Bitcoin’s price. In addition, the month of March isn’t the best period for Bitcoin so the current price slump shouldn’t come as a surprise.
March is a bad month for crypto historically
The weekly chart for Bitcoin shows a clear uptrend. Therefore, short-term corrections shouldn’t be classified as bearish trend reversals yet. Every bull cycle has periods of consolidation and corrections to generate more strength for the market’s next impulse wave.
Therefore, corrections of 30%-40% frequently happen during Bitcoin bull cycles and this should be taken into consideration for this pullback as well.
Historically, March is a terrible month for crypto as recent years have shown overall weakness during this period. Such corrections often end at the 21-Week MA, as that’s the critical indicator to watch for bull and bear the market’s momentum.
As long as Bitcoin’s price sustains above the 21-Week MA, further bullish continuation is likely. The 21-Week MA is currently at $29,000, but within a few weeks, it will be between $33,000 and $35,000. As long as Bitcoin stays above that $30,000 area and the 21-Week MA, investors shouldn’t be worrying about the general bullish trend.
Yields running up, causing weakness across markets
The primary reason for the weakness in Bitcoin and gold is shown in this chart. The 10-year yield across the world has reached the highest point in a year. That’s pushing investors out of assets like Bitcoin and gold.
In that light, the yields have been doing well, but also the dollar has been showing signs of recovery.
However, the moment the attention shifts to a specific topic, it often marks the end of such a trend. In this case, the yields are at a crucial level here as they could, technically, see a bearish support/resistance flip, after which they can drop to retest the 1% level.
This might happen following any news from the Federal Reserve in the coming weeks, but a dropdown in yields would be bullish for Bitcoin and gold moving forward.
Crucial levels to watch for Bitcoin price
The crucial levels to watch are defined in the chart above. As long as Bitcoin sustains support at $48,300-$48,700, a retest of the $52,000 area is likely. This is the critical breaker for further bullish momentum. If $52,000 breaks, a test of the $55,000 area and potentially new all-time highs are on the table.
If the $52,000 area holds as resistance, a breakdown below the $48,500 support seems likely. In that perspective, you’d be wanting to see $42,000-$44,000 hold as support next, which are quite critical.
Finally, the 21-Week MA is the essential indicator to watch for bull/bear momentum on the higher time frames. As long as that indicator sustains support, the bull market remains intact.
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.
Recommended for You