BTC closed yesterday’s session down 2.30%. This seems to be the logical continuation of the rise since Tuesday. Indeed, after the explosion in the price of bitcoin (BTC), it is obvious that a retracement ensues. All experienced investors know this. But is it really a fix? Check out this analysis.
Bitcoin (BTC) in retracement phase
Bitcoin gained 4.2% on Tuesday, initiating a slight bullish phase for all other cryptos. This continued the next day, with a performance of +5%. Two green days boosted by several positive news on the geopolitical situation. The total crypto market cap also increased by $72 billion over the two days, an increase of 8%. However, bitcoin closed in the red yesterday, suggesting a retracement. Which also lost $17 billion in market capitalization for all cryptos.
This retracement phenomenon on bitcoin is not new. Indeed, this is a fairly recurrent cycle on the financial markets: after the explosion, the correction. This is because the bulls are starting to close out their positions, which causes the upside pressure to drop. On the other hand, the bears are trying to push down. This will drive the price to the 0.786 Fibonacci retracement level, before continuing higher.
Where is the price heading during a correction?
The price target of a correction phase is often placed on a key level of the Fibonacci tool. Using this tool on bitcoin, this retracement objective is found around $19,645.7. Thus, investors should expect the price to decline towards this level for the next few days. Additionally, this area also lines up with several interesting levels.
Indeed, the moving average 50 (4h) is also in this area. This indicator could play the role of support for the price. Thus, we can consider a drop in the price of bitcoin to this level during this retracement phase, but not only. The strength of the bulls also seems to be decreasing. Sure enough, the RSI, which was in the overbought territory, is starting to drop towards 50.
Thus, a retracement phase is imminent on bitcoin. This drop could provide another buying opportunity for those who missed the boat.
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