- Bitcoin has rebounded strongly from its 16% correction to reclaim a key level at $18,500
- This level could act as the springboard for another attempt at all time highs
- Others are cautious however, warning of a bull trap which could see the 30% correction coming at the point of euphoria
Bitcoin has rebounded from its 16% correction to ease fears of an immediate further drop, suggesting that another assault on all time highs could be imminent. Having failed to break that milestone on two occasions last week, Bitcoin fell to $16,220, where many predicted further drops to lower support levels, in line with the standard 30% correction that Bitcoin typically sees in a bull run, especially after such an extended run.
Strong Rebound Suggests Another Attempt on ATH
Bitcoin has enjoyed a strong response to its drop on Wednesday/Thursday, establishing a strong support line as it has erased a large amount of its losses:
It has now regained the significant support area that has been in play since the 18th, and it seems likely that Bitcoin will now consolidate here before making its next move:
A move upwards from here has its next resistance at the previous high of $19,490, with support underneath the current level coming at $17,700 and $16,220, and below that $14,400. Dropping to this lower level would indeed see the 30% correction that many have been expecting.
Bitcoin Following Maximum Pain?
While the reclaim of the $18,300-$18,480 range has to be seen as a positive move, there is a word of caution to be preached. It is said that Bitcoin (and markets in general) take the route of maximum pain. We have seen this with Bitcoin first failing to take all time highs, which were seen as something of a fait accompli for three days straight, followed by this upward move when the entire market was calling for a further drop down to the $14,000-$15,000s:
Where are the 14k targets now? Nowhere… as always…#Bitcoin pic.twitter.com/fiPR6Y91Ks
— Livercoin (@livercoin) November 30, 2020
We may now find that Bitcoin creeps upwards just enough to get everyone excited by a potential breaking of all time highs before rejecting hard down to those lower levels and completing the 30% correction.
Such a move is not uncommon in Bitcoin’s history and would act as the perfect way to shake out holders of long positions, who would once again be the big losers after hundreds of millions of longs got liquidated when Bitcoin dropped at the height of euphoria last week.
