Just when it seemed like Bitcoin had entered a new trading range and was heading to new all-time highs, BTC's advance was stopped by some selling action, and the cryptocurrency was pushed back to 200 DMA. On Tuesday, Bitcoin saw a ~20% drop in price - from ~53k to ~43k. The candle looked damn scary. In fact, Bitcoin wasn't pushing to higher levels exponentially. There had been solid consolidation prior to the decline at 200 DMA and the chart looked bullish. RSI was well contained, shorts were well-contained. Things seemed great.
However, the joy wasn't meant to last long. Tuesday's correction has brought Bitcoin back to $46k and it is sitting just at 200 DMA. A few days ago, I read an article that said that leveraged trades were not happening in Bitcoin anymore and that volatility should be well contained going forward. Tuesday's action shows how that volatility is here to stay and downsides can be precipitous.
For now, the saving grace is that BTC is still above 200 DMA, which has been strong support in the past and also in recent months. RSI is now even lower than it was a couple of weeks ago when Bitcoin was around the same level. However, I do think that 200 DMA will be tested going forward and sellers will try to break it. Near term, I feel that this correction will last longer than 2 days and if 200 DMA support gets broken then it will take time to head higher. RSI is trending downwards which is another negative as far as momentum is concerned.
I feel that on any given day, there should be a buy order to buy Bitcoin at a price 15% lower than that moment's market price, in a bull market of course. One never knows when one will get lucky. Things are never certain in this market. Just like a 20% correction, Bitcoin can easily see a 20% advance if leveraged shorts get taken out. However, as time passes, things are getting tight for year-end predictions. 3.5 months to go for Bitcoin to double if it has to hit 100k by year-end - a level, many believe Bitcoin will achieve this year. Let's hope it does and the correction that happened will not last any longer than it has.