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Bitcoin analysis - Bitcoin price: unhealthy rise leads to overdue correction

Bitcoin analysis - Bitcoin price: unhealthy rise leads to overdue correction

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Even the longest course rally needs a breather. After the Bitcoin price had worked through important price targets in the previous week, there was increased profit-taking in the area of ??40,000 US dollars, which resulted in a 25 percent correction.

Bitcoin (BTC): BTC price two percent lower on a weekly basis

BTC rate: 34,126 USD (previous week: 34,940 USD)

Resistances / Targets: $ 35,075, $ 36,097, $ 36,600, $ 38,189, $ 40,407, $ 41,970, $ 43,703, $ 45,710, $ 61,694, $ 77,678

Supports: USD 32,200, USD 29,748, USD 27,563, USD 25,752, USD 24,298, USD 23,887, USD 21,892, USD 19,884

Price analysis based on the value pair BTC / USD on Coinbase

At some point even the strongest rally needs a breather. The BTC rate tried several times to overcome the 423 Fibonacci extension at USD 40,407 per day's closing rate, but failed three days in a row. After four green weeks and an absolutely overbought status, there was a sale on the crypto market in the night of January 10th to 11th. The BTC rate fell a staggering 23 percent to USD 30,300 within 18 hours. This resulted in an overdue correction on the market as a whole after weeks of bull boom.

Bullish scenario (Bitcoin price)

Courageous investors use the correction up to the supertrend in the area of ??30,000 USD for new entries. As a result, the price rose again to the resistance at USD 36,600 before profit-taking began again. Yesterday, Tuesday, the rate of the key currency remained within its range of the previous day. One speaks of a so-called inside day. On such a day, a new fair value is determined for the reserve currency. The bulls' goal must now be to stabilize the price above the EMA20 (red) at USD 32,700 by closing the day. If the BTC price can rise back above the red downtrend line in a timely manner and overcome the resistance at USD 35,075, the previous day's high at USD 36,600 will come into focus again. If this resistance is also broken, the direction decision in the area of ??38,189 USD will be made. The daily high of Monday January 11th is here.

Only when this resistance is overcome dynamically, a renewed test of USD 40,407 can be expected. A daily closing price above this resistance brightens the chart again significantly and increases the likelihood of further rising prices. If the all-time high of USD 41,970 is subsequently overcome dynamically, an increase to USD 43,703 must be planned for first. The 461 Fibonacci extension from the daily chart runs here. If the bulls can pass this resistance level, the next major hurdle awaits at USD 45,710. This target is taken from the monthly chart. If the rally picks up speed again and the BTC rate steers towards USD 50,000, an increase to the stated chart targets for 2021 at USD 61,694 and USD 77,678 can be expected in the medium term. Only when the reserve currency can stabilize above these resistance levels at the weekly closing rate, an increase of up to USD 100,000 or more would be conceivable.

Bearish scenario (Bitcoin price)

After the exchange rate of the reserve currency failed to break the psychological mark of USD 40,000 on three subsequent days by the end of the day, investors increasingly took profits. The course corrected almost exactly to the strong support in the area of ??30,000 USD. Although the bulls made a respectable comeback, there is still a good chance that the weekly low will be tested again. If the BTC rate falls below the EMA20 (red) at the end of the day and the support at 32,200 USD, the bears will try again to push the rate to the weekly low. If the Bitcoin price subsequently falls back to the purple support line at USD 29,748, this would be a small victory for the sellers.

If this support is also dynamically undershot, the correction should extend to the previous week's low at USD 27,563. Increased resistance from the bulls can already be expected at this chart level. If the bears can build up enough selling pressure and push the BTC rate below this support, a correction expansion up to USD 25,752 should be planned. If the bulls do not come back on the floor here either and stabilize the BTC rate, the strong support area between USD 23,887 / USD 23,710 comes into focus. This is where the gap from the CME's future price runs. If this chart mark does not stop and the weekly low of December 21, 2020 is dynamically undercut, the 2017 all-time high of USD 19,884 should be restarted. However, as long as the BTC rate does not slide permanently below USD 29,748, a restart of the breakout level in the area of ??USD 20,000 is still unlikely.

Bitcoin dominance: Bitcoin's market share unchanged on a weekly basis

Bitcoin dominance shown on the basis of values ??from Cryptocap

The BTC dominance is also this week in the area of ??the EMA20 (red) at currently 68.89 percent. The strong support at 68.01 percentage points has not yet been undercut on a daily basis. On the upside, the red downtrend line, starting from the high at 73.64 percent, is limiting the price. This means that the significant sell-off at the beginning of the week has not yet been able to shift the balance of power.

BTC Dominance: Bullish Scenario

The dominance of the reserve currency did not manage to overcome the resistance at 70.91 percent this week and bounced down several times in this area. However, the bulls were able to avert an extension of the consolidation for the time being and prevent a fall below the support at 68.01 percent. As in the previous week, the supertrend continues to act as a good support mark. If the BTC dominance overcomes the red downtrend line and, as a result, the horizontal resistance at 69.89 percent, the 70.91 percent comes back into focus. As long as the Bitcoin price cannot initiate a sustainable movement and is within the range of the last two trading days, its dominance will not change permanently. Only when the Bitcoin bulls manage to move the rate of the key currency back above 36,500 USD in the coming days, a renewed increase in dominance can be expected.

If the dominance of the reserve currency rises dynamically above the resistance at 70.91 percent, a march through to the resistance area at 72.01 percent should be planned. A renewed attack on the annual high is only to be expected when this chart mark is surpassed by the daily closing price. If the resistance is broken at 72.66 percentage points, an increase of 73.64 percent is likely. Only when the course high is overcome dynamically, nothing stands in the way of the increase up to the repeatedly mentioned maximum price target of 75.15 US dollars. Also this week, as long as the BTC dominance trades above 67.47 percent at the daily closing price, a shift in power in the direction of the Altcoins is still unlikely.

BTC Dominance: Bearish Scenario

Should the BTC dominance slip below the key support at 68.01 percent in the coming trading days and also dynamically undercut the 67.47 percent, a fallback of up to 66.50 percent should be planned. Should the Bitcoin price consolidate again in the coming days towards USD 30,000, the BTC dominance could also fall further. 66.32 percent and 65.57 percent then come back into focus. This chart level has often been the linchpin in the past. If these support brands are undercut dynamically, a decline to the breakout level at 65 percentage points is likely.

A renewed increase in BTC dominance can be expected at this strong support brand. The EMA200 (blue) and the overarching downtrend line, which has not yet been tested for consistency, run here. If, contrary to expectations, the dominance of the reserve currency falls back below 65 percent, the important support at 64.03 percent comes back into focus. The Bitcoin bulls will try again on this key support to increase the dominance again towards 68 percent. If, on the other hand, the BTC dominance slips dynamically below this support level, a price decline to the maximum bearish price target of 62.02 percent is conceivable. As in the previous weeks, this support level represents the maximum bearish price target.

Disclaimer: The price estimates presented on this page do not constitute buy or sell recommendations. They are only an assessment of the analyst.

The chart images were created using TradingView.

USD / EUR exchange rate at the time of going to press: 0.82 euros.

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