Is Bitcoin at risk of another drop below $40K in a historically corrective March?

Bitcoin (BTC) has seen a corrective week as the value dropped from $58,000 to $44,000 in a matter of days. This dropdown induced a panic response throughout the markets because the euphoria was instantly halted.

For example, the Crypto Concern and Greed Index plunged to month-to-month lows of 56 after being above 90, or “excessive greed” for a whole month. 

Nonetheless, such a panic response is unwarranted as a result of corrections seem incessantly in a bull market as a “reset” earlier than continuation. That is natural and wholesome and affords alternative for merchants and traders to purchase the dip.

Rejection at $52,000 signifies additional weak point

The 4-hour chart reveals an obvious downtrend because the earlier excessive at $58,000. This excessive might be the highest for the approaching months, a interval which will see a extra extended correction.

Nonetheless, the value motion since this prime at $58,000 signifies weak point as each assist stage flips into resistance, indicating additional weak point.

The chart reveals these flips, the place the $55,000 stage was the primary one. After that, the value of Bitcoin dropped considerably to the assist zone round $45,000. This assist zone held and resulted in a powerful bounce towards $52,000.

However, sadly for the bulls, this stage wasn’t damaged and as an alternative noticed a rejection, confirming additional weak point throughout the market and extra draw back for BTC worth. 

This now paints a transparent image of the important ranges to look at. Ideally, the assist zone between $42,500-$44,000 has to carry for additional upward momentum. If it fails, additional weak point may be anticipated towards the $37,500-$39,000 stage.

But when the $42,500-44,000 assist zone holds, larger costs may be anticipated as soon as Bitcoin breaks above the resistance between $50,000 and $51,000.

The bullish construction continues to be intact

Whereas the decrease timeframes point out weak point for BTC/USD, the upper timeframes recommend a wholesome correction. The market building continues to be very bullish, because the chart above reveals.

The earlier prime was at $42,000, after which the brand new assist was established at $30,000. This final prime was simply damaged as Bitcoin’s worth accelerated to the $58,000 excessive. Therefore, a correction to even $37,000 might be categorized as wholesome and natural in the sort of bull market.

Merely put, so long as BTC holds above the $30,000 low of January 2021, the market may be categorized as bullish.

March is usually a corrective month

Historical past reveals that March isn’t essentially the most bullish month for the cryptocurrency market. Lately, corrections have been seen in March. Particularly, corrections of 15%-60% occurred in 2015, 2016, 2017, 2018, and 2020.

The most recent crash was brought on by the Covid-19 pandemic and might be categorized as a “black swan.” However, corrections are likely to occur in March and this 12 months may additionally see one other pullback.

Due to this fact, corrections can final for a number of weeks and are incessantly not accomplished in only one drop. Therefore, a correction towards the $35,000-$40,000 continues to be on the desk.

The first indicator to look at for that is the 21-Week MA. Usually, corrections have a tendency to maneuver towards this line as a key level for a possible reversal. Due to this fact, within the coming weeks, this 21-Week MA may present assist within the correction.

At the moment, the 21-Week MA is round $28,000, although this could climb up within the coming weeks towards $33,000-35,000.

The views and opinions expressed listed below are solely these of the author and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer includes danger. You must conduct your individual analysis when making a call.