- Bitcoin finally corrected last night after its race to $42,000
- At 22% correction took Bitcoin down to $32,550
- New entrants to the market should just hodl and wait for the rebound
Bitcoin has finally endured what many have been expecting for weeks – a double digit correction. Having hit the dizzy heights of $42,000 on Friday, the weekend saw a period of stagnation before Sunday night saw it follow gold and silver into a correction, dropping to $32,550, bringing Ethereum down to $1,010 in the process. Following this quickfire crash, what are the levels we should be looking out for in the coming days?
Quick Up, Quick Down
Bitcoin had been existing within a channel since jumping to $42,000 on Friday, during which time some alts were experiencing double and some triple digit gains. However, having tested the channel’s support on three occasions it finally broke through and then experienced a rejection when it tried to re-enter:
This rejection was a clear sign that it didn’t have the strength to retake the channel, meaning that further downside was inevitable. As we can see, Bitcoin lost all the gains it had made since the 5th, finding support in an order block established early in the new year:
Should the correction continue we can look to support at $30,800 and $29,300 below current levels, although it looks like a recovery is underway. Such big drops are nothing to worry about and are only happening because of Bitcoin’s sharp rise. When an asset rises as sharply as Bitcoin has during the past few weeks it doesn’t have the chance to establish and test areas of support, leading to a quick up and and quick down with very little in between.
Don’t Sell – Bitcoin Will Recover
Even if Bitocin were to give up 30% of its gains and fall to $29,300, it is still almost $10,000 above its all time high, which is still a remarkable achievement considering that key level was breached less than a month ago. Once the recovery does start there are clear levels to watch for in terms of an assessment of strength:
For those who bought at $40,000 and are considering selling and getting out of the market, don’t. 30% corrections are standard in a Bitcoin bull run, and the fundamentals behind Bitcoin haven’t altered overnight. We are in a thriving bull market and every dip has been relentlessly bought up to this point, and once the selling is over we can expect a recovery to start as those who felt $40,000 too high realize that their hopes of a lower price are fading and buy in.
Don’t forget that even those who bought the top in 2017 were, until as recently as yesterday, up double. As the saying goes, if you haven’t made money on Bitcoin you haven’t held long enough. Just set an alert on your phone, go and make a coffee, and leave Bitcoin to do what it does best.