Bitcoin

Bitcoin price is rebounding despite fears for the new COVID, but will this correction be over?

The price of Bitcoin (BTC) has skyrocketed in recent months. This led to a new all-time high of $ 24,200. However, BTC was corrected on December 21st, as the stock markets also opened in the red. Bitcoin price fell 6% on Mondaywhile the US dollar currency index (DXY) rallied strongly.

These decreases and uncertainty appear to be due to the emergence of a new strain of coronavirus in the UK and therefore more restrictions on the horizon that could have a major impact on the markets, as happened in March.

A declining divergence is at stake for Bitcoin

BTC / USDT 4-hour chart. Source: TradingView

On the 4 hour chart A bearish divergence shows the breakdown from $ 24,000 to Monday’s lows of $ 22,000.

Bitcoin price is rebounding despite fears for the new COVID, but will this correction be over?
Bitcoin price is rebounding despite fears for the new COVID, but will this correction be over?

On the way there, however, this is still significantly higher than the price of Bitcoin three months ago. While such corrections are very common in the bull and bear markets.

So, Such declines should come as no surprise to seasoned traders. With this in mind, the levels to be observed are shown in the previous graphic. For the bearish divergence to be confirmed, Bitcoin price should reject the previous resistance area.

When this is declined at $ 23,400 to $ 23,600, there are more downsides on the table and the higher timeframe levels are tested as support. However, when this region rises from $ 23,400 to $ 23,600, A new all-time high is expected before the end of the year.

$ 18,500 is critical

BTC / USDT weekly chart. Source: TradingView

The only level to see Bitcoin at this point is the $ 18,500 area. This weekly level has many confluences around the previous all-time high and is the newest region of consolidation.

In the daily timeframe The most recent low is at $ 17,500. In other words, the price of Bitcoin needs to stay above this level in the daily timeframe in order to remain bullish.

Interestingly, according to the weekly chart, A decline towards $ 12,000 would still give the chart an optimistic outlook. However, Such a correction would be significantly higher than any standard bull market correction of 20-40%. But even such a sharp drop of 50% wouldn’t necessarily break the bull market cycle and provide a great opportunity to “buy the dip.”

The markets are shaking the DXY boom

3-day chart of the United States dollar currency index (DXY). Source: TradingView

The DXY index is seeing a slight rebound earlier this week, driven by the above-mentioned market uncertainty.

Since investors tend to look for security in times of crisis and uncertainty, Such an event could push the DXY index higher in the short term. This was seen during the March Crisis, after which the unprecedented expansion of the balance sheet by the FED marked the height of DXY.

The entire market cap is trying to retest the $ 550 billion

Weekly chart of total market capitalization. Source: TradingView

All cryptocurrency market capitalization has been turned down in the highest region ever, meaning a correction could be on the horizon.

Frequently, The total market capitalization chart shows a better view of the market than Bitcoin alone. Therefore, a correction to $ 550 billion would place Bitcoin in the $ 18,500 region. the critical short-term support zone to hold to avoid further downward moves.

Altcoins can particularly benefit from this in early 2021 whether the Bitcoin price can stay above $ 18,500 and start consolidating from there. Until then, the coronavirus-related fears and uncertainties are likely to continue to hamper markets.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trade movement involves risk. You should do your own research when making a decision.

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