Bitcoin at a Critical Juncture
After the recent Spot Bitcoin ETF approvals, the bitcoin price saw a significant drop. But some analysts believe that the correction may continue further. It is possible that bitcoin will confirm its base price structure by experiencing a 30 to 40% correction before resuming its upward momentum.
If this scenario plays out, a drawback to $30,000 or even $34,000 (0.618 Fibonacci level) could be expected. However, it’s important to note that for now, bitcoin is still holding above a trend line that began in August 2023, and it is also supported by a strong support level dating back to early 2021.
Weekly Momentum Indicator Reset?
On a longer-term perspective, the weekly stochastic RSI for bitcoin is currently declining rapidly. While this indicates downside momentum, if bitcoin can resist this decline, it has the potential to reset and begin indicating positive price momentum again.
Typically, the Stochastic RSI takes around 6 months to go from the bottom to the top and back to the bottom again. It hit the bottom in August 2023 and is projected to hit bottom again in early February. Once it reaches the bottom, the indicator could either bounce up or stay there for a short period.
This is a crucial moment for bitcoin, as it is threatening to break below the strong support levels. Traders should proceed with caution and prioritize risk management.
Hot Take: Bitcoin: Examining the Road Ahead
The recent drop in the bitcoin price and the potential for further correction have sparked debates among analysts. While historical patterns suggest that bitcoin may go through a significant correction before continuing its upward trajectory, it’s important to consider other factors such as support levels and weekly momentum indicators. The next few weeks will be critical in determining whether bitcoin confirms its base price structure or surprises the market with a different outcome.