Following on from Monday’s sharp pullback bitcoin appears to be consolidating above $40,000. Are the signs there for a move back to the upside?
Fear or greed?
Bitcoin took a 10% haircut over the weekend and going into Monday, and this has helped to move the dial upwards as far as the fear factor goes. Investors are nervous that the price will dump again, and if it does, the chances are that the downward momentum could snowball.
However, as things stand bitcoin is still looking as though it has absorbed the latest slew of selling and could be ready to start cancelling out this last move to the downside.
A 10% pullback hasn’t been experienced by the king of the cryptocurrencies since way back in August, so this was really due, and has helped the relative strength indicators (RSIs) to reset. The RSI indicates when positive or negative momentum is in the market, and right now the short to medium term RSIs are resetting at the bottom ready to turn back up and signal positive momentum to the upside again.
Bitcoin consolidating
Source: Trading View
As can be seen on the chart, $BTC has been respecting the 0.382 fibonacci level for the last three days (which also happens to sit on very strong support dating back to early 2021). If the price holds here before bouncing, this will be much more bullish than if the price went down to the 0.618 level. The wicks below are also signs that the price is being bought up by the bulls.
Retail still not here
So bitcoin is now at the juncture where a firm hold followed by a bounce could seriously get the hype back into the crypto market. It needs to be remembered that retail still isn’t aware of this bitcoin and crypto surge in the main. Most retail investors are still probably licking their wounds from entering into the market near the top back in 2021.
However, if bitcoin were to tag $50,000 or thereabouts there is bound to be a lot more mainstream interest. Be that as it may, this could also signal the top of this wonderful move from bitcoin that began all the way back at the beginning of 2023.
Major correction coming
Perhaps this might also be the point at which a truly major correction takes place, with bitcoin maybe heading all the way back to the $30,000 level, which would be a very healthy 40% reverse. Traders and investors should pay proper care and attention to risk management. Trade and invest safely.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
