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On Bitcoin and Ethereum’s Recent Selloff, This Is the Scenario Analysts Postulate on BTC and ETH Price

BTC

In the early hours of Monday, Bitcoin (BTC) kickstarted a correction that triggered a major downturn throughout the entire market. Within 72 hours, Bitcoin price plunged severely from highs of $58,367 to reach lows of $44,888. Ethereum price also fell under intense pressure, plunging to lows of $1,356 from recent all-time highs of $2,041.

Even though many traders were caught off guard with the correction, most still maintain that Bitcoin is still in an uptrend stating that pullbacks are a sign of a healthy market. ExoAlpha Chief Investment Officer David Lifchitz stated that Bitcoin’s recent charts seemed overbought, indicating that a “15% correction could happen” as part of a normal market cycle before BTC ultimately breaks out to new highs. Some also believe that the market was overextended, therefore such corrections were necessary.

However, the main concerns bothered around the unusual inflows into exchanges. Santiment noted that the same address which made a BTC import during this recent crash had also sold immediately before the BTC price crash in March 2020.

BTC/USD Daily Chart

Bitcoin presently trades at $48,775 as it struggles to flip $50,000 into support.

This Is the Scenario Analysts Postulate on BTC Price

“Bitcoin Archive,” a Twitter user believes corrections like these are part of the bullish cycle. Stating that the 2017 bull market had “9 dips between 20–40%”. In spite of these frequent deep corrections, Bitcoin still grew by “20x from its previous all-time” high throughout 2017.

But the question remains if the correction is over. A Twitter analyst posits the chances of consolidation in the next few days as the correction is far from being over. Stating:

“Bitcoin is still in correction and is hovering around a very significant SR level on H4. If it fails to break through this resistance level, we will see the price dancing around in the lower channel (BTC price sideways movement for the next days).”

The Bitcoin street journal also believes the BTC correction didn’t complete yet as there remains a strong resistance around the 52k, stating:

“We expect the price will reject from this zone soon, so we could see the 42k zone, Alts could dump again, this analysis will fail if the price takes hold above the 52k area.”

If Bitcoin extends its correction, an analyst sees the likely chances of Bitcoin retesting $44,800 level or even dropping to a lower support level, at $42,000. He however sees the ideal scenario for Bitcoin price is to hold onto the $44,800 support area if it drops again, stabilizes it as a macro support level, and moves back up.

A pseudonymous trader known as “Salsa Tekila” maintained that there is a big support area at $41,000 and also resistance at $54,000. He stated:

“My current take on $BTC mid-term: 1) Support around $41K. 2) Resistance around $54K. Depending on the context, It might trigger swings around those two vicinities. Likely just scalp until then, unless major events come to fruition.”

Bitcoin tends to seek liquidity after a prolonged consolidation, which means a decline to fill buy orders at lower support areas could happen which may consequently kickstart a new rally.


Courtesy: Glassnode/Bitcoin Archive Twitter

Twitter user ‘Bitcoin Archive’ believes Bitcoin price may soon skyrocket due to FOMO as liquid supply keeps dropping. Stating this in a recent tweet:

Supply
• Liquid supply dropping
• Illiquid supply rising
= FOMO soon Rocket

On Ethereum (ETH) price, an analyst postulates two likely scenarios. First, bulls could return to retest the all-time high at $2,050 and subsequently reach $2,500 in the medium-term. Second, the price could resume a downward trend. The danger point for this scenario is if the price plunges beneath this recent low of $1,356.

Image Credit: Glassnode/Bitcoin Archive Twitter, Shutterstock

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