Bitcoin Drops 6% In 24 Hours, Why This Might Trigger A Bullish Rally
Bitcoin price has been fluctuating highly in the last week. Amidst news of bitcoin whales stocking up on bitcoin, the price jumped up past $34,000. Briefly breaking $35,000 yesterday afternoon before coming down to continue trading n the $34,000 range again.
But the past 24 hours have seen the coin take a good dip in price. Over the span of a day, bitcoin has lost over $2,000 from its price. This equates to about 6% of its price in the last 24 hours. Bitcoin price currently sits in the red as the coin now trades for about $32,525 at the time of writing this article.
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Sudden dips in price over short periods of time are not uncharacteristic for the coin. Or for the crypto market in general. This is a feature of digital currencies, not a bug. So, investors expect things like this to happen all of the time. It comes with the territory of getting massive rewards in a short amount of time. But this then leads on to the question of what the current dip indicates.
Most times when prices move too high in a short time, this usually comes with a price correction in order to get the asset to a price point where it is not fluctuating too wildly. Price corrections are incredibly notorious for happening during bull runs.
This is due to the fact that in a bull market, prices are moving by large margins on a daily basis. Sometimes in only a matter of hours.
Bulls struggle to keep price of bitcoin up as price dip continues | Source: BTCUSD on TradingView.com
While price corrections happen a lot in bull markets, this does not mean they can’t happen in bear markets. Price corrections can go either way; up or down.
This dip could be indicative then of a price correction occurring from the price spike that happened this past week. Usually, when coins go up in price in such a short amount of time, people take out profits if they expect the price might correct downwards instead of upwards.
Bitcoin has now started recovering a little bit which could mean that this dip was indeed a price correction.
Bitcoin Bull Rally In The Works?
Looking at the chart shows this might be a bullish indicator for bitcoin. The price of bitcoin has continuously spiked and then corrected downwards for a bit before spiking again.
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Bitcoin which is down over 50% of its all-time high could very well be on the verge of another breakout. Engulfing bull patterns show that there is always a reversal at the end of a downtrend.
With the price currently holding at $32,000, a loss of momentum at this point shows a potential end for the downtrend. Going forward, an end to the downtrend means a reversal signal for bitcoin.
Conservatively, the price looks poised to take over the $35,000 range again. But given that point was just broken, the next position point would be $5,000 higher. So $40,000 might be the most likely point for bitcoin to land after the rebound.
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Volatility in the market remains very low. This could explain the not-so-wide movements in the coin price recently. But once volatility picks up, big swings are expected in the price of bitcoin. A rebound bull rally is likely to see the coin reclaim $50,000 in the best of cases.
Investors cashing out of the Grayscale Bitcoin Trust will give some much-needed volatility to the market.
Featured image from Businessamlive, chart from TradingView.com