Bitcoin Price Plummets, Signaling Potential Correction
Bitcoin, the largest cryptocurrency, experienced a significant 17.8% drop in its price from $49,000 to $40,300. This decline may be attributed to concerns about the spot BTC ETF and Grayscale’s Bitcoin liquidation. Sellers managed to break through the support trendline of the rising wedge pattern, suggesting that further correction may be in store for Bitcoin.
Reversal Pattern Indicates a New Correction Trend
- A rising wedge pattern formation indicates the end of a recovery phase.
- The BTC price above the 38.2% and 50% Fibonacci retracement level shows strong buyer support.
- The intraday trading volume in Bitcoin has decreased by 52%.
The recent two-month recovery in Bitcoin’s price formed a rising wedge pattern, which typically indicates an upcoming correction. Additionally, despite the launch of the First Spot BTC ETF, the underwhelming performance of Bitcoin has caused concern among investors. On January 12th, there was a significant outflow from Bitcoin, resulting in a break below the support of the wedge pattern. The breakdown led to a drop in Bitcoin’s value to the 38.2% Fibonacci retracement level, with its price currently at $41,800.
If selling pressure continues, there is a possibility of Bitcoin’s value dropping by another 15%, potentially reaching a local support level of around $35,550.
Increase in Whales Strengthens Bullish Outlook
Despite the bearish near-term projection for Bitcoin, on-chain activity reveals a positive development. The number of large-scale Bitcoin investors, known as “whales,” has increased. This rise in whale addresses holding over 1,000 BTC signals strong confidence or strategic positioning in the market.
In line with this development, if the BTC value remains stable above the 50% Fibonacci retracement level of around $37,200, it could greatly enhance the likelihood of a strong recovery by buyers.
- Vortex Indicator: A bearish crossover between the VI+ and VI- slope indicates that the correction trend is still ongoing.
- Exponential Moving Average: The coin price trading above the 100-and-200-day EMA confirms the overall bullish trend.
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Hot Take: Bitcoin Faces Correction as Whales Increase Confidence
The recent sharp downturn in Bitcoin’s price and the break of its support trendline indicate a potential correction trend. However, there is a silver lining as the number of large-scale Bitcoin investors, known as whales, has increased. This suggests that these investors have strong confidence or strategic positioning in the market. If Bitcoin can maintain stability above key support levels, it may pave the way for a strong recovery. Overall, while short-term projections may be bearish, the long-term outlook for Bitcoin remains positive.
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