Bitcoin (BTC) has had to cope with a 15 percent price decline in the last few days of trading. If Bitcoin gives up the support level at USD 57,988, there is a threat of a correction widening to the USD 54,000 area. Meanwhile, the BTC dominance may prevent a relapse to important key supports for the time being.
Bitcoin (BTC): False breakout causes disillusion among investors
BTC course: 59,390 USD (previous week: 69,000 USD)
Resistance / goals: $ 61,771, $ 63,471, $ 64,896, $ 66,299, $ 67,416, $ 68,568, $ 70,856, $ 76,472, $ 77,678, $ 85,563, $ 87,090, $ 89,982, $ 100,259, $ 114,961
Supports: $ 59,299, $ 57,998, $ 55,817, $ 54,077, $ 53,005, $ 51,307, $ 49,555, $ 48,222, $ 47,070, $ 45,993, $ 42,855, $ 40,585, $ 39,240
After the Bitcoin price rose to a new all-time high of USD 69,000 last Wednesday with the inflation figures from the USA, there was a clear reversal on the same day. This so-called “intraday reversal” shows impressively why a breakout in the daily chart is only confirmed when the daily closing price is above the respective resistance level, in this case USD 67,792. As a result, the crypto key currency sold off, which led the BTC rate to the cross-support of EMA50 (orange) and Supertrend at USD 59,100. Bitcoin marked the provisional weekly low a few trading hours ago at USD 58,500, which is not far from the central support level of USD 57,998. The reasons for the sudden correction are many.
On the one hand, the open interest of leveraged long bets on Bitcoin jumped noticeably. Many investors saw the chance of a continuation of the trend and increasingly got into leveraged products on Bitcoin. Since the so-called “funding rates”, ie the holding costs for such products, had been increasing gradually for weeks, whales and institutional investors are taking their chance to liquidate these bets. Another reason can be seen in the strengthened US dollar. This is also at a 12-month high. In addition, investors are again increasingly concerned about an impending wave of regulations in the crypto market in the coming months. There is also a “sell the fact” of the Taproot update in the room. So far, the approval of new futures-based ETFs in the USA has not had a positive effect on the price development. This bundle of reasons, whether responsible for it or only put forward as a reason, at least for the time being prevented the direct march through to the USD 70,000.
Bullish scenario (Bitcoin price)
The bulls got a clear shot across the bow – a warning signal that Bitcoin does not only know one price direction. The relapse below the EMA20 (red) caused the correction dynamics to increase significantly. Only after a 15 percent correction did the buyers return increasingly to the market in the area of the red support zone. The cross support from EMA50 and Supertrend could be defended in the last two trading days. As long as Bitcoin is valued further above the red support zone, the cops still have the scepter in their hands. The first thing to do is to dynamically recapture the USD 61,771 and recapture the EMA20, currently at USD 62,700, as quickly as possible. If this endeavor succeeds, Bitcoin has to prove itself again in the yellow resistance area. Only when the USD 64,896 is overcome, Bitcoin could start the USD 66,299 again. If BTC breaks through this resistance dynamically, it is important to stabilize the Bitcoin price above the 138 Fibonacci extension at USD 67,416.
The road to new all-time highs
Then a retest of the all-time high at USD 69,000 and above the high also a break through to USD 70,856 should be planned. If there is no significant profit-taking here and Bitcoin can assert itself above the psychological USD 70,000 mark, price targets are activated at USD 76,472 and USD 77,678. Once again, investors will reap profits here. As long as the Bitcoin price is not corrected more clearly and falls sustainably below USD 70,000, the chances of a subsequent increase into the target zone between USD 87,090 and USD 89,982 are still good. Only when the bulls break through this strong resistance area sustainably will the price target of the 361 Fibonacci extension at USD 100,259 be activated. At the latest in the area of 100,000 USD, increased profit-taking is to be expected. The overall target price of USD 114,961 (Fibonacci extension 461) remains in place.
Bearish scenario (Bitcoin rate)
The bears came back impressively. If the seller succeeds in pushing the BTC rate further and Bitcoin slips below USD 59,299 per day’s closing rate and then back below the key support at USD 57,988, the correction threatens to widen. The sell signals in the MACD and RSI indicators currently also speak for this. Should the bears dynamically undercut the support at USD 57,998, an immediate relapse to USD 55,817 is likely. A direct sale up to the orange support area between USD 54,077 and USD 53,005 should therefore not come as a surprise. This zone represents the breakout level of the current trend movement. Bitcoin should rebound northwards here if possible in order to prevent a relapse into the blue support zone between USD 51,307 and USD 49,555. If Bitcoin continues to trend weakly here too, the correction extends to around USD 48,222. If possible, this price mark should not be given up.
Below USD 48,222 the chart is clouding
Since the EMA200 (blue) is currently also in this area, a direct breakthrough is very unlikely. If Bitcoin falls below USD 48,222 per day’s closing price and thus also gives up the EMA200, the correction expands to at least USD 47,070. If the bears manage to break through the green support zone, the correction will immediately extend to the MA200 (green) at USD 45,992. If the cops do not come back here, the correction threatens to gain momentum. Bitcoin is likely to drop to $ 42,855 or even $ 40,585 as a result.
The low here from September 2021 must be defended. Bitcoin could fall back to a maximum of 39,240 USD. If this price mark is given up, the end of the upward trend is up for grabs. There is a risk of massive price losses in the direction of USD 30,000. However, as long as Bitcoin is stable above USD 48,222, setbacks are still good opportunities for entry.
Bitcoin dominance: BTC dominance back on the MA200
Bitcoin dominance was able to stabilize above the support zone between 42.45 percent and 42.99 percent in the last few days of trading and rose back to the strong resistance level at 44.25 percent on Wednesday, November 17th. This means that the crypto dominance has remained practically unchanged since the last analysis. If the Bitcoin dominance succeeds in stabilizing above this price mark and also breaks the MA200 (green) at the daily closing price, the BTC dominance should be able to increase to 45.71 percent.
BTC Dominance: Bullish Scenario
The breakout mark from October 5 at 42.45 percent was defended in the last seven trading days. Today, Wednesday, the dominance of the crypto reserve currency can increase further north and overcome the two moving averages EMA20 (red) and EMA50 (orange). Should the strong resistance at 44.25 percent be overcome in a timely manner, the upper edge of the red box at 45.05 percent will first come into focus. This would mean that the BTC dominance would again be listed above the MA200 (green). If a breakout from the red box succeeds, a breakthrough to the strong resist at 45.71 percent is likely. If Bitcoin’s market dominance manages to break through the blue resistance area, a break through to the EMA200 (blue) at 46.32 percent should be planned.
Only when this resistance level has been regained will the high of 47.72 percent move into the focus of investors as a target. If the BTC dominance can increase further in the coming trading weeks, the chart will increasingly brighten. A rise into the red resistance area would be increasingly likely. The increase target of between 48.67 percent and 49.26 percent also functions as a medium-term price target this week. A breakout above the high of July 30, 2021 could finally end the sideways movement that has been going on since May. This would activate the range between 50.00 percent and 50.97 percent as the target range. In the long term, an increase in the gray resistance range between 52.19 percent and 53.16 percent cannot be entirely ruled out.
BTC Dominance: Bearish Scenario
If the BTC dominance rebounds again at the 44.25 percent significantly south and falls back to the 42.99 percent, things could become increasingly sensitive. If there is no significant trend reversal, a decline back to the low of 42.45 percent should be planned. The lower Bollinger Band, which provides support, is currently also running here, so a breakthrough would point the way. If the correction then extends further, it is likely to fall back to the October low of 41.13 percentage points. Here, the BTC dominance must necessarily turn north to prevent an expansion of the correction up to 40.66 percent.
If Bitcoin dominance tends further south in the medium term, the probability of a retest of the 40 percent mark increases significantly. Persistent weakness could subsequently lead Bitcoin dominance to its annual low of 39.66 percent. If the annual low is also broken dynamically, the correction will expand immediately towards 37.67 percent. This development is likely to make a further jump in Bitcoin’s price difficult, but it could lead to a renewed rally on the altcoin market.
Disclaimer: The price estimates presented on this page do not constitute buy or sell recommendations. They are only an assessment of the analyst.
The chart images were created using TradingView created.
USD / EUR exchange rate at the time of going to press: 0.88 euros.