- Bitcoin dropped by a sharp 11.5% over the past 24 hours as the cryptocurrency fell from $41,500 to hit the current $35,800 level
- The coin had dropped as much as 22% to reach as low as $32,300 before rebounding higher
- FCA issues cryptocurrency warning to British investors, and it seems that miners are starting to take some of their profits off of the table
|Key BTC resistance levels||$38,000, $39,000, $41,860, $42,000, $43,500|
|Key BTC support levels||$34,300, $32,000, $30,000, $29,635, $28,000|
Bitcoin finally saw a large retracement after dropping by 11.5% over the past 24 hours of trading. The cryptocurrency had set a new ATH around $42,000 over the weekend but started to fall lower from there.
Toward the end of the weekend, the first Bitcoin weakness sign started to appear as it fell beneath the $40,000 level. From there, it continued lower until reaching $37,200, where the downtrend briefly stalled.
The bearish pressure continued through the evening as BTC continued to tumble to drop by a total of 22% to reach as low as $32,300 before a reversal was seen. This meant that Bitcoin dropped by almost $10,000 in the short space of just 12-hours. It managed to find support around $34,300 and has since pushed higher toward $36,000.
If Bitcoin were to continue to close a 4HR candle beneath $34,300, we could be seeing $30,000 at some point this week.
With institutions driving BTC higher over the past month, is this an opportunity to buy the dip?
If this is just the start for institutional buying, we could expect a large rebound as they, too, try and grab a piece of the latest Bitcoin flash sale.
How to actually buy the dip
However, one institution that has been buying Bitcoin recently, called Guggenheim, seems to be looking in the other direction. Their CIO, Scott Minerd, stated on Twitter that the Bitcoin parabolic rise is unsustainable. Their target at $35,000 was exceeded, and they are planning to take some of their profit off of the table.
Bitcoin’s parabolic rise is unsustainable in the near term. Vulnerable to a setback. The target technical upside of $35,000 has been exceeded. Time to take some money off the table.— Scott Minerd (@ScottMinerd) January 11, 2021
Today, the UK Financial Conduct Authority also made a statement warning Brits to be careful when investing in Bitcoin;
“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the FCA said. “If consumers invest in these types of products, they should be prepared to lose all their money.”
This is quite a strong statement from a financial regulator, and it could help the bearish sentiment re-enter the market.
Lastly, it seems that miners are selling their holdings at an increased rate after seeing strong profits over the past month. Data from CryptoQuant shows that their Miner Position Index is the highest it has been since July 2019, indicating that miners are now selling at rates not seen for quite some time:
These three combined negative factors might start making a deeper retracement over the coming week, especially if BTC was to head beneath $34,300 on the 4HR charts.
Let us take a quick look at the markets and see where we might be heading. But before you continue, make sure to let us know about your Bitcoin price prediction for 2021!
What’s your #Bitcoin price prediction for the end of 2021??— CoinCodex (@CoinCodex) January 11, 2021
Bitcoin price analysis
What has been going on?
Looking at the daily chart above, we can clearly see Bitcoin hitting the $42,000 ATH toward the end of last week. The resistance here was provided by a 1.414 Fibonacci Extension level that could not be broken over the weekend.
As a result, BTC started to tumble yesterday, hitting as low as $34,300 (.382 Fib Retracement). Today, Bitcoin continued further lower as it broke beneath the support at $34,000 to reach as low as $32,300.
Luckily, it found quite solid support at $34,300, and this is best seen on the 4HR chart above. The .382 Fib Retracement level provided the support here, and the 4HR candle is still yet to close beneath this support.
A break and a closing candle beneath $34,300 would cause BTC to spiral into a further price decline and likely send it beneath $30,000.
Bitcoin price short-term prediction: Bullish
Despite the deep correction, BTC still remains bullish right now. It would need to close beneath $30,000 to turn neutral and further beneath $22,000 (100-day EMA) to turn bearish.
If the sellers continue to push beneath the $34,300 (.382 Fib Retracement) level, added support lies at $31,965 (.5 Fib), $31,000, and $30,000.
Beneath $30,000, additional resistance lies at $39,635 (.618 Fib Retracement), a rising trend line, and $28,000. This is followed by $27,163, $26,300 (.786 Fib), and $24,350 (.886 Fib Retracement).
Where is the resistance toward the upside?
On the other side, the first level of resistance now lies at $37,000. This is followed by resistance at $39,000, $39,425 (1.272 Fib Extension), and $40,000.
If the bulls can break back above $40,000, resistance is found at $41,000, $41,865 (1.414 Fib Extension), and $42,000.
Beyond the ATH prices, additional resistance lies at $43,492, $45,360 (1.618 Fib Extension), $46,565 (short term 1.414 Fib Extension), and $47,360.
What are the technical indicators showing?
The Daily RSI had shown signs of bearish divergence recently, which started to play out over the weekend. It has now started to drop but still remains above the mid-line. A break beneath the mid-line will show that the bears have taken control of the market momentum.
Keep up-to-date with the latest Bitcoin Price predictions here.
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