Bitcoin’s biggest downside price correction this year – a mere bump on the road to the moon

The current correction in the bitcoin price of 23% over the past 48 hours is the crypto hot topic of the week, as most of the altcoins are pulled down along with the leader. On the 1 hour chart we can see how major support structure has been broken, with this significant bearish retracement. I doubt Elon Musk could move the market like this just with his Tweets, so he was probably just echoing what we all knew – that bitcoin was overbought and due for a pullback. On the daily chart it has been obvious for a while that the bitcoin price has been way overbought. This has been the first major parabolic pump in this current bull market cycle. There are allegedly still around five more such pumps to come in the overall bull market of 2021, and price is set to breach $100k and even $150k in due course of time.

Therefore this was a great time to buy the dip. Price is still looking bearish now, with the 13 MA on the 1 hour acting as resistance instead of support as we saw in the bull trend. Now that we have flipped bearish the inverse is playing out clearly. Price topped out at around $58k and is now down to new support at around $45k.

The last time price crashed below the 200 MA on the 1 hour chart with such velocity was way back around 20 January, a month ago. So this is the correction of the month. On the daily chart price has dipped to the 21 MA, and is just below it in fact. If we close the daily candle below the 21 MA, it could suggest further declines. The RSI on the daily chart still has room to the downside, though it is hovering at 50 – right in the mid range and so undecided. The RSI could bounce here, suggesting that we remain bullish overall, but the velocity of the sudden downward trend leaves us uncertain until we see what plays out next.

The next strong support below this is at the 55 MA on the daily around $40k, which lines up with previous resistance in price from early January and early February. At this stage these prices are looking very inviting, and look like discount bargains where we can accumulate more cheap bitcoin. Even though just a month ago this price range was looking quite the opposite of inflated.

Since we are in an overall bull trend for this entire year still, and are heading to a target beyond $50k, I would be happy to buy at this current price, knowing there is more upside to come. It’s all relative. The ultimate support level that price could still fall to and yet still be considered in bullish territory is the 21 MA on the weekly chart. This is all the way down at around $27.5k, which looks unlikely under this year’s circumstances. Nevertheless, it would not surprise me, as this 21 MA on the weekly is the traditional floor for price in a bull trend.

We may just get a brief wick to the downside, if you are lucky to catch it. Price is only now just leaving the overbought region on the weekly RSI for the first time since 19 October. So this is a significant phase of the bull cycle. Finally we are seeing a healthy retracement after the parabolic uptrend all this year so far. Support at $45k has held for the past 12 hours now, though anything is still possible, so it would be best to wait and see what price action does.

I would personally DCA (dollar cost average) my long entries now, buying in a fraction more every 24 hours, or with each noticeable dip further down. Since no one can really predict the bottom just yet, this would be a practical way to acquire any bitcoin now for the next leg up, on the way to $100k and beyond. The talk of this bull cycle being a “supercycle” is interesting although speculative at best. Just because we saw price go parabolic for two months doesn’t mean that we are going to break longterm patterns that play out with each halving and four year cycle.

A supercycle means that price just keeps going up, all through this and the next halving cycle, combining them into one long bull trend. We may have entered the era of mainstream adoption and whale institutional investment, but the cycles will more than likely keep to their traditional patterns, with another year or so of bull market now, followed by two years of bear market and then the next halving in 2024, leading to the next bull market.

Thereafter price can aim for $1 million – or so goes the dream, the vision and the theory. It sounds impossible, but so did the current price that we have already reached, so it would simply be more of the same. I am no longer surprised by bitcoin price action if it is to the upside. It’s just these short term retracements that we have to keep our eye on if we want to still make some more trades on the way up. I wish you happy trading as you ride the OX home to the moon.

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