Recapping the Recent Crypto Market Crash
This morning, there was a significant drop in Bitcoin price, leading to a widespread sell-off in altcoins. Bitcoin experienced a nearly 10% decrease, while altcoins saw drops ranging from 20% to 30% from their recent highs.
It’s understandable that this sudden decline has created fear and uncertainty among investors. However, it’s important to take a step back and look at the bigger picture. By examining higher timeframes like the monthly chart, we can gain a more reassuring perspective compared to the volatile daily chart.
In fact, the high timeframe view reveals a confirmed breakout with substantial trading volume. The market still has the rest of January to close with a gain, which would turn the volume bar green. If this happens, it could present an excellent opportunity for dip buyers.
Potential Confirmation of Breakout by End of January
A breakout accompanied by high volume after three years of declining volume is highly significant and may indicate a bull run in the cryptocurrency market over the next few months. Volume plays a crucial role in confirming price breakouts when combined with technical indicators or chart patterns.
In the example mentioned above, the 1M BTCUSD chart closed above Ichimoku’s Kijun-sen. This didn’t occur in 2019 but did happen in 2020 and into 2021. Additionally, Bitcoin closed above the upper Bollinger Band, which was also exclusive to 2020.
Closing above the Bollinger Band serves as a buy signal, particularly when supported by high volume. High volume indicates more BTC being traded at the current price, suggesting increased market participation from either major players or widespread traders. However, it’s crucial for the monthly chart to close with a green volume bar to confirm this potential breakout.
Hot Take: Is This the Ideal Buy the Dip Moment?
In a market characterized by sudden drops and volatility, the recent flash crash may be an opportunity for dip buyers. The high timeframe view reveals a confirmed breakout with significant trading volume, indicating the potential for a bull run in the coming months.
While fear and uncertainty may be prevalent, zooming out and considering the monthly chart can provide a more reassuring perspective. If January closes with a gain and turns the volume bar green, it could signal an ideal moment to buy the dip in the cryptocurrency market.
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