Bitcoin's Largest Price Correction in History, Will BTC Price Continue to Fall?
Over the last 24 hours, the Bitcoin price suffered its largest single-day drop in its short history, falling from a high of $58,000 to a low of $48000. What will BTC do next?
The BTC price is now correcting losses, but it is facing a strong resistance near $54,000 and $55,000 and is currently trading at around $50,000 on major exchanges.
Following its recovery, Paolo Ardoino, CTO of Bitfinex told Blockchain.News that this type of volatility is nothing new for Bitcoin and believes that although the sharp drop could further “galvanise Bitcoin’s critics” who continue to dismiss the cryptocurrency as an economic sideshow, he believes that these critics are missing the point completely.
Ardoino said :
“For many of the battle-tested exchanges that have weathered the market fluctuations, volatility isn’t new and is to be expected in such a young market. For many in the industry, development and deployment is priority. Price movements are more of a sideshow.”
Sideshow or not, what can we expect from the Bitcoin price in the short-term?
Bitcoin Price Analysis
Source: BTC/USD Daily Chart via TradingView
From the daily candlestick chart of the Bitcoin price, it can be seen that the BTC/USD currency formed a long red candlestick pattern with the longest lower shadow yesterday on February 22. The BTC price dropped down below to the resistance line of the ascending channel with the lowest price recorded at $47,400—indicating that the BTC price could not maintain its bullish momentum and the bears managed to push the price down into the channel line successfully.
The long lower shadow occurred between 8 pm-12 pm Hong Kong time, with sellers quickly pushing the price down to approximately $47,400, but the bulls once again took charge and pushed the price back up to about $49,000 only minutes later. This phenomenon shows that although the bears want to sell Bitcoin and locked profits aggressively, the power of the bulls still cannot be underestimated and investors took the opportunity to buy Bitcoin at a low price.
Over the past two days, the candlestick chart has closed below the 9-day Moving Average, while the Moving Average Ribbon indicates that investors are bearish on the BTC market in the short-term.
At the time of writing, the BTC price is again testing the midpoint of the upper body channel. In our technical forecast, if the BTC price can stand firmly over $52,000 and rebound effectively, it would indicate that the buyer's momentum is sufficient to continue the uptrend and that bulls have control of the market. This would mean that Bitcoin’s first target would be to break through the pressure line of the ascending channel again, which is currently about $57,000, to hit $60,000.
On the contrary, if the Bitcoin price falls below the midpoint of the channel, it will be the first sign of weakening buyer momentum and the BTC price may test the support level of the ascending channel at around $47000 which will be the second big indicator of failing buying power.
If BTC breaks below this price support level of $47,000, then Bitcoin may correct to meet the 50-day Moving Average and could fall as low as $41,036 in the coming days.
Image source: Shutterstock
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