The bitcoin market has experienced a predominantly negative trend over the last two weeks, coinciding with the approval of Spot Bitcoin ETFs. The recent nearly 5% decline on Monday pushed BTC below a key trend line it had been following since October 2023.
Contributing to the downward pressure are ongoing sell-offs from the Grayscale ETF and the impending release of a substantial portion of Mt Gox’s BTC to creditors in the coming months. This combination suggests that the current market conditions may not favor an immediate increase in BTC price.
Despite the bearish sentiment, market dynamics rarely follow a straight trajectory. BTC is approaching oversold conditions from a technical standpoint, indicating the potential for a short-term bounce. The daily chart reveals that BTC found support around $39,000, with the current price hovering around $40,000. There’s a possibility of a return to confirm the trend line break, now acting as resistance at the $41,000 level.
While a short-term rebound is plausible, the sustainability of the current bull market may require a significant correction. Historical data from previous bull markets suggests that average corrections of approximately 30% are typical. Since reaching a local top at $49,000, BTC has experienced a 21% dip. A corrective move to the strong support at $34,000, also a 0.618 Fibonacci level, would constitute a healthy 30% correction.
In a more fearful market scenario, potentially driven by particularly negative news, a retracement to confirm the top at a robust price structure of $30,000 might occur. This would represent an almost 40% correction, providing a thorough reset for the next significant upward move.
In conclusion, while a short-term bounce for BTC is plausible, potential retracements over the next few weeks may continue, finding support around $34,000. This level could serve as a platform for BTC to reverse its trend and move upwards once again.
