Bitcoin sold off on Monday, dropping sharply early in the trading session to under the $48K level before promptly finding support at the 50 Day EMA and bouncing higher, closing the daily candle just above $54K. This is a bearish candle, but despite its severity Bitcoin found support at a key support level where it bounced, indicating Bitcoin may have just completed its Wave 2 correction in a single day.
(February 22, 2021 7:30PM EST)
Bitcoin sold off today, dropping nearly 10% early in the day to reach my Wave 2 correction price target as shown above before finding support at a key bullish support level and recouping a majority of the losses. If this was indeed our Wave 2 correction, then that's great, as it happened sooner than we were expecting and that should allow Bitcoin to begin consolidating before resuming to higher highs. This is eerily similar to what happened a month or so ago when Bitcoin rallied from $14K to $42K in a few weeks' time, then dropped over $10K in a day to under $29K, and promptly recovered to $34K or so. I suspect we are likely seeing something similar play out in the same accelerated fashion.
If Bitcoin did not put in its W2 correction bottom yet, then we could see Bitcoin drift lower for some time to then put in a double-bottom or marginally lower low before resuming the uptrend again. This is entirely possible so we'll have to monitor it but for the time being, enjoy the discounted prices.
Once a higher low is confirmed and the W2 correction is officially "in," we'll then look for Bitcoin to start working its way back higher again, first to $55K - $60K, then $70K, etc. I am confident we have not yet seen the "real" price discovery yet in Bitcoin and the general crypto markets: the infamous "Wave 3 of 3" which is known for ripping traders' faces off and turning bears to bulls. Given where we are in the cycle, I think that time is nearing close once this W2 is in, which I believe might be a W2 of W3. Wave 3 of 3 should be the wave that'll take Bitcoin to $100K and beyond.
In traditional markets, gold rallied as the US dollar fell for the third day in a row. The 10-year yield fell a bit on the day but is just under the yearly high of 1.374%. The 10 Year Yield's rise has been really detrimental to gold's price as of late with safe-haven seekers getting higher returns with bonds than gold returns less storage fees. We are looking for a local top in yields in the very near-term -- if it's not already in. When yields ultimately retreat and the US dollar continues lower, we'll see some resumed strength in gold and a continuation of the uptrend.
Look for tentative support at the $50K level, then the 50 Day EMA around ~$48K. Below that, look for longer-term support near the 200 Day EMA around $40K.
Immediate-term resistance is roughly the $60K level, from which Bitcoin sold off just under there -- around $58K.