- Bitcoin has undergone a stark correction since the ~$12,400 peak on Monday.
- As of this article’s writing, the leading cryptocurrency trades at $11,700. This is $700 below the local high, though the asset fell as low as $11,600 earlier today.
- Bitcoin is down 3% in the past 24 hours, actually outperforming altcoins like Ethereum and XRP.
- The correction in the crypto market comes as the U.S. dollar has bounced after an influx of selling pressure.
- Analysts think that Bitcoin may be poised to bounce after the $800 correction from the local highs.
- Whether or not BTC revisits the recent peak, though, remains to be seen.
Why Bitcoin May Soon Bounce From Here
Bitcoin’s drop over the past day has seemingly been relentless. The leading cryptocurrency has shed support after support level despite buyers attempting to step in. As of the time of this article’s writing, BTC trades for $11,700, around $700 below the local high.
Despite this strong sell off in a short time frame, an analyst says that Bitcoin could bounce.
The analyst in question shared the chart below along with four technical observations backing his optimistic viewpoint on August 18th. These four technical observations, all formed in regards to Bitcoin’s four-hour chart, are as follows:
- The Tom Demark Sequential has formed a red “9” candle, which is often seen right before an asset undergoes a bullish reversal. The Tom Demark Sequential forms “9” and “13” candles when an asset reaches an inflection point in its trend.
- The Stochastic Relative Strength Index (Stoch RSI) has reached an oversold level and is starting to undergo a bullish crossover. This suggests a reversion to the upside, likely towards $12,000.
- Bitcoin has bounced off the 100-period simple moving average, which held as support on at least two separate occasions over the past two weeks.
- BTC has bounced off the bottom of a symmetrical triangle pattern that has held as support on three separate occasions over the past two weeks.
Chart of BTC's price action over the past few weeks with a number of technical analysis points from trader CryptoHamster (@CryptoHamsterIO on Twitter). Chart from TradingView.com
Really? Not Everyone Thinks a Bounce Is Imminent
Despite these technical signals, not everyone is convinced that a bounce is imminent.
Michael Van De Poppe, a trader at the Amsterdam Stock Exchange that follows crypto closely, said earlier today that the move on Monday was a clear “fake-out.” This fake-out should lead to a correction, he suggested:
“Well, we did get the fake-out, didn’t we? I thought the drop would be towards $11,500 but came close. The general scenario is that we’ll be ranging a bit here, before continuation of the downwards momentum. Overall -> alts (smaller ones) continue to do well.”
Image Courtesy of Crypto Michael. Chart via TradingView.
Others noted that the cryptocurrency is becoming “fragile” as it nears extremely important support levels like $11,700-11,800.
Photo by Daniel J. Schwarz on Unsplash Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Bitcoin May Be Poised to Bounce After $800 Correction Due to These 4 Reasons