Over the past few weeks, we have watched Bitcoin go on an absolute tear. Many are now asking whether the latest run to all-time highs is here to stay or if Bitcoin is now set for a major correction.
Immediately following a significant bull flag on July 24th that saw prices consolidate tightly around the $9300 mark, BTC made a run for the moon. In less than a week, Bitcoin reached highs of nearly $12250. Since then, price action has been very choppy, but the level of volatility that Bitcoin is now experiencing should be considered normal for the digital asset.
On August 18th, Bitcoin reached prices just shy of $12500 before correcting back down to $11630 a day later. The 7% drop in value in less than a day has spooked many, especially since there was an assumed level of support at the $11950 mark.
The world’s largest cryptocurrency in terms of market cap value seems to be making a comeback, however. At the time of press, Bitcoin is currently crossing over the 200 SMA to the bullish side and the 13-hour EMA has just crossed over the 30-hour EMA. From a technical perspective, these are all signs that BTC is headed north, at least for the time being.
Other indicators seen on the one-hour chart also point towards incoming bullish price action. The RSI is currently at 52 and is slowly heading towards the top of the oscillator. While the RSI is not always a true indicator of price action, combined with other indicators it can provide useful clues. In this case, it appears that BTC is neither under nor oversold, meaning there is still plenty of room to the upside should enough buying pressure come in.
The TTM Squeeze and the MACD – both momentum indicators – are also pointing toward upward momentum in price action for Bitcoin.
On the larger time frames, Bitcoin’s situation is also still looking quite bullish, despite the recent pullback in price. Looking at both the daily and the weekly charts, we are still looking at higher highs and higher lows coming off of the recent rally. Until a significant close to the low side occurs, many analysts believe that there is not much reason to switch to a bearish sentiment at the moment.
For many months, Bitcoin has been gaining a foothold in markets that were currently inaccessible to the cryptocurrency. Connections made have been deep and institutional involvement has proven successful in cementing Bitcoin is many different forms of financial markets. Added to that, there are still several major projects planned for Bitcoin that are most likely going to take the coin to new levels.
Another fundamental aspect of the crypto space that cannot be ignored is the recent DeFi boom that has exploded over the past few months. While DeFi is based on the Ethereum network, any strong implementation of crypto and blockchain, has a tendency to boost just about every other crypto project in the space.
Should you be worried about Bitcoin’s recent pullback in price action? Most experienced with Bitcoin price action would most likely say no. Bitcoin is known for its wild swings and investors in the popular coin have traditionally been ready for the kind of volatility that BTC is known for. Keep in mind that no financial market that has a value dictated by supply and demand will ever trade up or down forever without some correction and profit taking. At the moment, things are still looking very strong for Bitcoin, but we’ll be keeping an eye on the charts to see if anything changes. Stay tuned for more on the subject.