Bitcoin In Bear Market. Buy The Dip?
Bitcoin Drops Below $50K, Altcoins Follow. Buy, Sell, or Hodl?
by Bogdan Giulvezan
After establishing a new all-time high above $58,300, the “digital gold” dropped into the $45,000 area and is currently trading at approximately $45,200. We’ve talked before about pullbacks being a normal thing in an uptrend and if we look at Bitcoin’s movement since late 2020, we could call this the mother of all uptrends, with incredible volatility and wild movements.
But since volatility goes both ways, what goes strongly up, comes strongly down, in other words, even if Bitcoin lost more than $10K in a few days, we can still call this a normal retracement, at least for the time being. With that being said, the big market crash that started in 2018 was “just a retracement” at first, but price kept dropping through support levels until it reached $3,000.
However, there’s a big difference between what happened then and what is happening now because the fundamental environment has changed. Back then, Jamie Dimon (JPMorgan Chase & Co CEO) was saying: “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.” On the other hand, these days institutional investors, funds, and major companies such as Square, MicroStrategy, and U.S. giant Massachusetts Mutual Life Insurance Company (MassMutual) have already boarded the Bitcoin train. Not to mention that PayPal supports buying and selling of cryptocurrencies and just recently, Tesla purchased $1.5 billion worth of Bitcoin.
Chart Analysis – BTC/USD
Even as I’m writing this, price is jumping all over the place, but currently it is trading around $45,200, very close to the key support level at $45,000. It’s important to note that price was rejected twice at $52,000 resistance and this means we now have a lower high, which is a bearish sign, at least for the short term.
On the other hand, price action may create a double bottom at $45,000 support, which would be bullish for Bitcoin. It comes down to a “bounce or break” scenario that will likely determine the pair’s next move. If the current support is broken, we may see a drop into $42,000 that could extend into the psychological support at $40,000. A bounce at current levels will probably take price above $50,000, for another test of resistance.
The RSI shows a sort of bullish divergence: price is currently making a double bottom while the oscillator shows a higher low. This is a sign that price may climb but always remember that divergence alone cannot be considered a signal to buy and it must be used in conjunction with other factors.
