Crypto Daily - The latest dip in the Bitcoin (BTC) price is currently going strong. A plunge of $7,500 just since Tuesday has sent the market into a spin. Is this just a normal case of high volatility, or is the Bitcoin price in for a much more extensive retracement?
Volatility plays havoc with traders
The life of the average Bitcoin investor is fraught with uncertainty. An emotional roller-coaster is probably playing havoc in the minds of many, as Bitcoin bulls generally take the stairs, while the Bitcoin bears are just jumping out of the window.Many factors are attributed to this current drop in the Bitcoin price, such as the continued rise in treasury yields, inflation concerns, and an overall downturn in investor sentiment.
However, can it just be the very simple fact that Bitcoin reached oversold levels, and its correction has been speeded up by volatility caused by long liquidations and probably a decent dose of market manipulation?
The Bitcoin ETFs, and probably lots of very large buyers, need to purchase their BTC, and if lots of leveraged traders can be liquidated, the price can be brought down to cheaper levels. This is all the better for these big players, who are arguably first in the pecking order to benefit from market manipulation.
A standard Bitcoin retracement so far
Source: TradingView
The 4-hour chart for $BTC shows that the retracement for this move has been fairly standard so far. The 0.618 fibonacci level is a very healthy level to go back down to, and even if the dip does get deeper, the 0.786 Fibonacci at $93,700 would also be a good level for a bounce.
The major horizontal support $84,000 converges with the 1.618 Fibonacci and also the rising 100 daily moving average. So this would be the last support before going back to retest the top of the last bull market at $69,000.
All this said, a bounce from the current level of around $95,000 could be a distinct possibility, given that this is also the midway point of the range Bitcoin is currently in.
$93,600 is the base for the next leg higher
Source: TradingView
Zooming right out into the 2-week chart, it can be seen that there is a very good level of horizontal support at $93,600. If we were to return to the earlier short-term chart, it can be seen that this lines up with the 0.786 Fibonacci. Could it be that market structure will continue to be laid above this support level, and that the next stage of the bull market will use this at its platform?
At the bottom of the chart is the highly important Stochastic RSI. On such a high time frame as the 2-week, to see the indicator lines heading downward is not a good sign. They will need to turn back up for the bull market to continue. The midway point at 50.00 acted as support in the 2017 bull market. It will need to do the same this time round, or a much deeper correction will likely materialise.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.