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The market has mostly seen negative movement for bitcoin over the past two weeks, and ever since the Spot Bitcoin ETFs were approved. Is this dump now over, or is there still more downside to come?
Negative selling pressure
Monday’s nearly 5% drop took $BTC below a trend line it had been respecting since October 2023. Add to this the constant selling pressure from the Grayscale ETF, and the arrival on the market over the next couple of months, of a huge chunk of the Mt Gox $BTC, which will be paid to creditors, and you have a setup that is probably not conducive to a higher $BTC price just yet.
Short term bounce is due
That being said, nothing goes up or down in a straight line in markets. $BTC is approaching oversold territory, at least on the technical side of things, and some sort of a short term bounce is due.
Source: Trading View
Looking at the daily chart above, the $BTC slide does appear to have been arrested as it found support at around $39,000. The price is currently flirting with $40,000, and might be returning to confirm the trend line break, which is also around the $41,000 level that has now become resistance.
A respectable correction is needed
Could $BTC even break back above the trend line and the resistance? Of course, this is a possibility, but perhaps not a probability. For this bull market to remain a healthy one, there really does need to be a respectable correction.
Looking back over previous bull markets, average corrections of around 30% have been the norm. So far, since hitting the local top at $49,000, $BTC has managed a 21% dip. Taking this to 30% would be an excellent corrective move down to the strong support at $34,000, which also happens to be a 0.618 fibonacci level.
That said, if the market became really fearful, perhaps on some particularly negative news, a retracement all the way back to confirm the top of very strong price structure at $30,000 could take place. This would be a nearly 40% correction, and would certainly completely reset everything, ready for the next big move up.
In summary, $BTC could be bouncing from here. This could take the price back to $41,000, and perhaps beyond. However, looking out over the next several weeks, the retracement may well continue, with a good level of support at $34,000, where $BTC could reverse back to the upside once again.
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