BOTS Crypto News week 20
Bitcoin is going through one of its biggest corrections this year. The virtual currency lost more than a third of its value in 4 weeks' time and corrected 15% this week alone. The fear and greed index shows levels we haven't seen since the Covid sell off in March last year. Is this correction the end of the bull cycle? Or is this a good buying opportunity? I will give my full analysis of the crypto market down below.
By: Steven Eblé
Last week I wrote that Bitcoins volatility is likely to come back because we had a long period of low volatility. I thought Bitcoin was more likely to go up than down because the weekly time frame showed hidden bullish divergence. But things turned south when negative news came out.
As I wrote in my introduction, Bitcoin corrected over 30%. The reason for the correction on Bitcoin, earlier this week, was set into motion after Elon Musk tweeted about his concerns on the environmental impact of Bitcoin. After the tweet Bitcoin crawled back up and things began to look good. Then the second sell off happened, again because of a tweet of Elon Musk. The tweet was a reaction on another tweet, and it signalled that Tesla might sell its Bitcoin holdings this quarter. What’s next for Bitcoin after all this negative news?
Bitcoin is currently at the low of the rangebound construction, this range is roughly between 44.000 and 63.000 US-dollar. Around the 44.000 US-dollar level there is also the demand line of the falling wedge pattern. So these two support levels might act as support through which we can target the supply line around 52.000 US-dollar.
If that happens hidden bullish divergence can begin to form because of the lower low in price with the higher highs on the RSI and Macd. If we sell off further the swing high from January is the next target, this level is around 40.000 US-dollar.
If we look at Fibonacci retracements, we can see that Bitcoin also made a 618 retrace. Bitcoin bounced over 5% from this level which signals buy pressure. It is very common that after a 618 retrace assets begin to reverse to the upside so that’s something to look out for.
If we look at the weekly time frame, we can see that we are currently below the bull market support band. The bull market support band is built out of two moving averages, the 21-week sma and the 20-week ema, and in the last bull market this band held for support the entire way. It is important that this holds for support if bulls want to keep momentum.
Ethereum had an amazing run last month and increased almost 100% in value. But Ethereum could not hold the uptrend after Bitcoin dropped so severely. The blue line that acted as support for weeks broke and was retested as resistance which signalled that bulls lost momentum. After this correction, which are the support zones for Ethereum where it can bottom out.
The first support zone around 3.200 US-dollar is already tested and acted as support for now. If selling does not slow down and sell pressure keeps on building up the next target for Ethereum is around the 2.500 US-dollar mark.
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