BTC Shaking Out Weak Hands Before Next Wave Higher (1/22/21)

BTC Shaking Out Weak Hands Before Next Wave Higher (1/22/21)

By Crypto Daily FX | Crypto Daily FX | 22 Jan 2021


Bitcoin sold off on Thursday, dropping nearly $5K as Bitcoin has officially broken down from a tightening wedge, closing the trading session just north of $30K. This is a bearish candle as Bitcoin has now retraced over 25% of its ATH of ~$42K in what looks like a stiff correction that will take Bitcoin back down into the $20,000s. 

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(January 21, 2020  7:30PM EST)

Bitcoin sold off on Thursday, dropping about $5K or 15% to fall to around the $30K level. This is what we expected after a parabolic run from below the previous ATH to over $40K; what goes up must come down (somewhat). Don't be alarmed; this is a healthy market reaction and normal behavior following a stupendous face-melting rally that saw no virtually no red days in almost a month. For now, the short-term trend is down while Bitcoin reverts back to the mean, digesting the past 1-2 month run as we look for higher support to print a higher low at which point we can start to look higher once again. 

Now that we have a decisive direction, I'm looking for support at strategic levels: the 50% Fibonacci retracement at ~$29K, 61.8% at ~$26K, and finally the 78.6% at ~$21K. I don't imagine Bitcoin gets below the 61.8% which is a common retracement ratio for bull market corrections and impulsive Wave 1s; Plus, the 78.6% doesn't tend to be a significant level in crypto, although I think $20K would be ironclad support for Bitcoin. 

After this correction finds support and puts in a bottom, Bitcoin will start to consolidate and look higher again as the fundamentals remain bullish as ever; demand is high and only increasing, supply is low and ever-decreasing, fiat currencies are devaluing and a growing population is increasingly looking for a store of wealth to protect their money. 

There have been some negative headlines in the media lately, particularly from Janet Yellen about banning Bitcoin, a BTC double-spend issue, and JP Morgan doing a quick 180 and to say Bitcoin might be a sell mere days after issuing a $100K+ price target. Have no fear; this is fear-mongering and a shift in market sentiment based on emotion. Weak hands are being shaken out before the next leg higher; the 'top' is far from in. 

Going forward my modus operandi is to buy on dips, DCA a small amount weekly, and even earn Bitcoin if you can. The path of least resistance is up; don't try to fight it unless you're willing to get burned.

Support: Look for support around the 50% Fibonacci retracement level at ~$29K, 61.8% at ~$26K, and finally the 78.6% at ~$21K.

Resistance: $40K remains immediate near-term resistance. If Bitcoin breaks above $40K, look for $45K, and then $50K. After that, we'll probably move in $10K increments.

It's worth noting that somewhere around ~$52K Bitcoin's market cap will equal $1 trillion, so at that point, I think we could also see a selloff. However, any rally thereafter should be further supported as a $1T market cap would give the green light for many more conservative institutional investors to initiate Bitcoin positions as Bitcoin will finally be "big enough" for them to even add an allocation.

 

Buy Bitcoin here.

Earn Crypto here.


Crypto Daily FX
Crypto Daily FX

Daily Price Forecasts using Technical Analysis, Price Action, and Fundamental Analysis.


Crypto Daily FX
Crypto Daily FX

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