The Bitcoin market continues to consolidate after rising to a new all-time high of around $ 42,000, with a 30% correction. At the time of publication, the cryptocurrency is trading above $ 34,000, once again bouncing off the support of $ 30,000. Whether Bitcoin can continue to rise or will need more time to consolidate remains the main question, analyst Michael van de Poppé notes.
In 2020, there were several periods of accumulation when the price of bitcoin remained in a limited channel for several months. Such periods are necessary for the market to gain strength before continuing the bullish trend. Whether this scenario will repeat itself in this situation is also unclear.
The 3-hour chart shows a clear downtrend after peaking around $ 42,000, as indicated by a series of lower lows and highs. Lower highs are indicated by gray areas on the chart. They are too obvious to be ignored.
Thus, a bullish reversal will require breaking through the critical resistance between $ 34,000 and $ 35,000, which served as support in the past. If this level does not turn into support again, it will be possible to speak of a classic example of a change from support to resistance with the potential for further decline.
Bitcoin has already tested $ 30,000 several times. The more often the level is tested, the weaker it becomes. In addition, each new bounce also gets weaker, resulting in lower highs. Retesting $ 30,000 will confirm the weakness of the market, which may result in a fall into the $ 24,000 – 26,000 zone.
Support is visible on the weekly chart, coinciding with the 21-week moving average. This same line was an important support throughout the 2017 bull cycle. At the same time, a deviation of the chart from this line is noticeable, which may indicate an overvalued bitcoin in the short term.
Often the price of an asset returns to the 21-week moving average for retest before continuing the rally. Now the line is located near $ 20,000. This mark also corresponds to the previous all-time high and the final target for the current correction, since the market does not want to see Bitcoin below the 2017 peak, Van de Poppe argues.
However, a drop to $ 20,000 is not guaranteed, because there are already enough buyers interested in purchasing cryptocurrency at current prices. Thus, a correction to $ 24,000 – 26,000 will be a very healthy manifestation and fit into the general patterns of a bull market, the analyst adds.
The total capitalization of the cryptocurrency segment is consolidating above the previous all-time high of 2017, about $ 750 billion. The analyst does not rule out the possibility of retesting this level, which is also a natural continuation of the vertical trend of recent months.
Van de Poppe recalls that bitcoin tends to decline in February, and admits that it can restore the upward trend in the summer. If it succeeds in breaking the $ 34,000 level, the next resistance is near $ 37,500, which corresponds to a lower high. If Bitcoin makes another lower high, it is likely to head towards the 21-week moving average. Such corrections can negatively affect altcoins, but at the same time provide opportunities for increasing positions.
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