Bitcoin Price Analysis: Is a Pullback Imminent?
Bitcoin price alongside most altcoins is having an exciting start to the week, rising above $65,000 for the first time in two years. The leading cryptocurrency continues to reward investors who seem to be on board for the long haul eyeing the moon, considering the impact of the halving due in April and positive sentiment backed by well-performing Bitcoin ETFs.
Despite the bullish outlook, dips are not unusual during bull markets. Bitcoin price nosedived below $39,000 in January from highs around $48,000 as investors sold the ETF news after buying the approval rumor in Q4.
This analysis aims to be critical of the prevailing market conditions to unearth possible reasons for a pullback to allow for re-accumulation ahead of a renewed upswing to new record highs.
1. Profit-Taking Activities
The majority of altcoins embarked on an upward trajectory last week and throughout the weekend while Bitcoin consolidated above established support at $64,000.
This consolidation allowed investors to take profits, redistributing to altcoins, especially large to mid-cap projects like Shiba Inu (SHIB) and Pepe (PEPE). Pepe is among the latest coins to reach a new all-time high.
- Investors may consider selling Bitcoin for profit and investing in altcoins
- Bitcoin’s behavior between $65,000 and $66,000 could determine investor reactions
- A steady rise above $66,000 could create FOMO and boost BTC towards an all-time high
- If Bitcoin fails to close above $65,000, selling pressure may increase
- Possible support levels are between $63,500 and $64,000
Potential Double-Top Pattern Sell-Off
Bitcoin will face a new sell wall as it nears the record high. During the previous bull run in 2021, Bitcoin topped out around $69,000 leaving the $70,000 level untested.
Investors who purchased BTC at the peak of the last bull run may want to sell at the breakeven price, intensifying the selling pressure. In the absence of a correction due to enhanced sentiment, consolidation may take precedence. In other words, Bitcoin may rise to a new ATH followed by sideways movement between $60,000 and $70,000 going into the halving period.
Bitcoin Price Overbought Market Conditions
Bitcoin has continued its rally after January’s sell-off below $39,000 with short periods of consolidation for re-accumulation. The Relative Strength Index (RSI) is currently overbought at 86 on the four-hour chart.
- An RSI reading between 70 and 100 suggests that bulls are in control but a reversal may be approaching
- If a correction occurs, Bitcoin’s strongest support is expected between $61,211 and $63,166
- About 1.38 million holders purchased 539k BTC at an average price of $62,086
- Buying within this range could prove beneficial in the long run considering the impact of ETFs and the halving
Hot Take: Is a Pullback on the Horizon?
While Bitcoin continues to soar to new heights, there are several factors that suggest a potential pullback may be imminent:
- Profit-taking activities as investors redistribute funds to altcoins
- A potential double-top pattern sell-off as Bitcoin nears the record high
- Overbought market conditions indicated by the RSI
These factors, combined with the possibility of a correction, highlight the need for caution and careful analysis in the current market. It is important to consider these factors and stay informed to make informed investment decisions.
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