Bitcoin (BTC) has recently experienced a correction from its all-time high of $73,835 to around $66,980. The recent correction after reaching all-time highs has some analysts cautious, while others see it as a buying opportunity. The spot Bitcoin ETF market flows remain a point of focus, with outflows potentially impacting demand. The Fear and Greed Index hovering near “Extreme Greed” suggests a potential pullback, but a reversal in inflows could spark a return to new highs.
Nevertheless, bullish undercurrents still remain. Some analysts highlight dwindling Bitcoin reserves on exchanges, often a precursor to price surges. Additionally, shorts appear to be capitulating, potentially leading to a short-term price increase as they buy back to cover their positions. The upcoming 2024 Bitcoin halving, an event that historically reduces supply and boosts prices, further fuels bullish sentiment.
Technical
The 4-hour chart shows Bitcoin’s price is trading tentatively at 66,980.13 as the recent recovery that sent the price action above both the 20 (green line) and 50-SMA (blue line) finds significant resistance around the 100-SMA (orange line). Despite the price action’s recent break above the 20-SMA and 50-SMA, it finds itself trading below the 100-SMA, which resides at the 23.60% Fibonacci retracement level-enforced supply zone, which could act as a significant resistance to the price action’s attempt for higher ground.
The RSI (59.73) remains above the 50.00 level, suggesting bullish sentiment. A sustained breakthrough above the 100-SMA could offer short-term trading opportunities towards the $71,398.97 resistance level. A break above the initial resistance could trigger a bullish run, likely bringing the all-time high of 73,835.57 within the bulls’ reach in the near term.
Conversely, with the recent break of the shorter-term SMAs below the 100-SMA suggesting bearish short-term momentum, a price rejection at the current resistance zone could leave the 38.20% Fibonacci retracement level (65,090.14) as the initial level of interest lower. A sustained break below the level could confirm the bearish momentum and would likely bring the 50.00% (62,388.68) and 61.80% Fibonacci retracement level (59,687.21) into play in the short term.
Summary
While BTC faces short-term uncertainties amidst corrections and market sentiment fluctuations, the combination of fundamental support levels and technical indicators suggests a potential for both upside and downside movement. Technically, overcoming the $68,000 resistance zone could propel it towards new highs, especially with the upcoming halving event. Conversely, a rejection at this level might trigger a correction.
Sources: TradingView, Trading Economics, NewsBTC, Cointelegraph, Coin Edition.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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