Bitcoin (BTC) saw a corrective week as the price fell from $ 58,000 to $ 44,000 in a few days. The downturn triggered a panic reaction in the markets when the euphoria immediately ceased.
For example, the Crypto Fear and Greed Index fell to a monthly low of 56 after surpassing 90, or “extreme greed,” for an entire month.
However, this panic reaction is not justified, because in the beef market, corrections often appear as a “reset” before continuing. It is organic, healthy, and gives traders and investors a good chance of a failed purchase.
Failure to $ 52,000 indicates further weakness
In the 4 hours chart, there is a clear downtrend from the previous high of $ 58,000. This rise may peak in the coming months, a period that could undergo a longer correction.
However, price action since the $ 58,000 peak points to weakness as each support level turns into resistance, indicating further weakness.
The chart shows these fluctuations with the $ 55,000 level first. After that, the bitcoin price fell dramatically to a support zone of around $ 45,000. This support zone held and led to a strong rebound to $ 52,000.
Unfortunately for the bulls, this level was not destroyed, but was instead rejected, confirming further market weakness and the deterioration of the bitcoin price.
This now gives a clear picture of the critical levels to look for. Ideally, you should keep a support area between $ 42,500 and $ 44,000 for the extra speed. If this fails, then we can expect further weakness towards the $ 37,500 – $ 39,000 level.
However, if the support area continues at $ 42,500- $ 44,000, then a price hike can be expected when Bitcoin crosses the resistance between $ 50,000 and $ 5,000.
The ascending structure remained unchanged.
While lower timeframes indicate weakness in BTC / USD, higher timeframes indicate a healthy correction. As you can see from the chart above, the market build remains optimistic.
The previous peak was $ 42,000, after which the new support was set at $ 30,000. This last peak was easily shattered when the Bitcoin price rose to as high as $ 58,000. So in this beef market, a mod up to $ 37,000 can be classified as healthy and organic.
Simply put, as long as BTC remains above $ 30K in January 2021, the market can be categorized as bullish.
March is often the corrective month
History shows that March is not the most favorable month for the cryptocurrency market. In recent years, adjustments were noticeable in March. In particular, adjustments of between 15 and 60% have occurred in 2015, 2016, 2017, 2018 and 2020.
The most recent accident was caused by the Covid-19 pandemic and can be classified as a black swan. However, the correction usually occurs in March, and there may be another setback this year.
Therefore, the correction may take several weeks and is often not done in just one drop. Thus, the amendment for $ 35,000 – $ 40,000 remains in effect.
The primary indicator to look for is the 21-week moving average. Corrections often tend to approach this line as a significant point of a potential reversal. Therefore, in the coming weeks, this 21-week moving average may provide support for the correction.
The 21-week moving average is currently around $ 28,000, although it should rise to $ 33,000 – $ 35,000 in the coming weeks.