Bitcoin Price Drops Below $ 48,000, But Is The Bull Cycle In Danger?
The price of Bitcoin fell below $ 48,000 in a major correction on Monday just before the US market opened.
The price of Bitcoin (BTC) has risen apace in recent weeks, but has seen a significant correction in the last 24 hours. The price of BTC fell more than $ 10,000 from $ 58,000 to less than $ 48,000, a correction of almost 20%.
This pullback, which many anticipated when 28,000 BTC were deposited in Gemini, also caused other cryptocurrencies to fall in time with Bitcoin, causing Bitcoin’s market dominance to rise as a result.
But will last year’s history repeat itself and will we see a boring and corrective phase in March? Let’s analyze the charts.
Bearish divergence implies that the price could go further down
Markets never go up in a straight line and corrections should occur from time to time. This can be seen as a kind of “reset” for the market, which returns to the mid-trend line and the buzz subsides.
In the first stage of a correction, people still expect the move to be a small correction, while sentiment slowly starts to shift. The moment the correction continues, the more the price drops, the worse the sentiment becomes.
Deep down, many will say that Bitcoin is “dead” and is a Ponzi scheme once again, after which the price has historically recovered.
However, the real question now is whether the market will see a prolonged correction or whether the price of Bitcoin will stay above the green box shown in the chart above. That green box is the compression run that technically should serve as important support.
If the zone between $ 42,000 and $ 44,000 holds, the upward movement is likely to continue. In that case, the point of interest at $ 63,000 is still on the table.
However, bearish divergence and weakness earlier this week suggest that a further decline is possible. In that sense, losing the area of USD 42,000 to USD 44,000 could result in a further correction towards USD 37,000.
March historically is not a bullish month
Bitcoin’s weekly chart offers some beautiful historical data, showing that March tends to be a period of correction or consolidation. Major corrections occurred in 2017, 2018, and 2020 during this period, while 2016 and 2019 saw side price action.
Of course, it is not certain that history will repeat itself, but rhymes and historical data often provide insight into how market cycles work.
In that sense, the critical indicator to watch out for is the 21-week moving average, which should prevent the price of Bitcoin from falling further. In that perspective, the current price level of the 21-week moving average is at $ 28,000, and this will rise to the zone of $ 32,000 to $ 34,000 in the coming weeks.
Therefore, the recent highest low was marked at $ 30,000, which means that a further drop towards the $ 38,000 to $ 40,000 zone is not unlikely as it would be a regular 30-40% correction.
Critical levels to watch out for for Bitcoin
The daily chart for Bitcoin shows some critical levels to watch out for during the current period. First of all, the recent crash brought the price of Bitcoin to a life support level. You should keep this zone between $ 42,000 and $ 44,000 to avoid going further down.
If this level does not hold, a further decline to the level near $ 37,000 is likely. This would also warrant a retest of the 21-week moving average.
However, if the green zone between $ 42,000 and $ 44,000 acts as support, we may see a rally towards $ 63,000, as stated above.
However, it is too early to make predictions, as historically the end of February and March is a corrective and not a bullish period for markets in general.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.