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Bitcoin Drops 10%: What’s Next?

Bitcoin Drops 10%: What's Next?
Bitcoin Drops 10%: What's Next?

Bitcoin (BTC) has experienced a significant price drop in recent days, shedding over 10% of its value. This downturn has sparked concerns among investors about the future of the cryptocurrency market. However, Nick is suggesting that a 40-50% correction is to be expected, based on historical patterns.

Technical Analysis and Smart Money Concepts

Examining the 1-hour timeframe on Binance charts, Nick observes a truncated move that could indicate a potential bounce. However, he also warns that overextension could lead to further downside. Elliott Wave Theory suggests a target around $39,183.19. Resistance levels in the $42,350 to $42,540 range are also identified.

Using smart money concepts, Nick notices a bearish structure, with rejection at key moving averages (50 EMA, 50 SMA, 200 EMA). A death cross on the 1-hour timeframe is also observed. This combination of factors suggests that selling pressure is likely to persist.

On the daily timeframe, a bullish structure is evident, but with potential corrections. The fair value gap is highlighted as an area of interest, while an impulsive downward movement is expected to complete a five-wave structure. Stochastic RSI suggests momentum for a downside move, and divergence indicators signal bearish trends.

Longer-Term Outlook and Price Predictions

The weekly timeframe shows rejection at the upper parallel channel, indicating that Bitcoin may be nearing a top. Support levels at $36,000, $30,000, $24,000, and $19,850 are targeted. Overbought conditions on RSI and Stochastic RSI, coupled with low volumes, further support the bearish outlook.

The monthly timeframe reinforces bearish sentiment with heavy overbought conditions. Nick anticipates a move towards $30,000, with potential further downside. Nick is confident in a $30,000 Bitcoin, considering the parallel channel and indicators. Possible longer-term targets at $24,000 and $19,850 are also mentioned.

Risk Factors and Monitoring

Nick advises monitoring key support and resistance levels for confirmation. Nick also emphasizes the need to be aware of potential market manipulation and to continually evaluate on-chain data, volume, and technical indicators. Nick recommends being prepared to adjust trading strategies based on evolving market conditions.

Overall Analysis and Investment Strategy

Overall, Nick believes that a 40-50% retracement is to be expected based on historical patterns. Nick notes that the monthly stochastic RSI indicates a move from overbought to oversold, but he also points out the possibility of staying overbought for an extended period.

Nick acknowledges that healthy 40% corrections have occurred during the current bull market, and he notes that both the weekly and daily timeframes support the notion of a necessary correction. Nick envisions a 40% correction in Bitcoin, expecting prices below $30,000.

Nick is taking short positions, anticipating lower prices for accumulation in altcoins. Nick notes that there is no divergence on the RSI but point out that it is nearing overbought levels. Nick highlights RSI behavior in 2021 and point to previous instances like June 2019.

Finally, Nick emphasizes the importance of assessing momentum, volume profiles, and overall market conditions. Nick suggests that the expected correction is a great opportunity to enter Bitcoin and altcoins.

Conclusion

Overall, Bitcoin’s recent price drop has sparked concerns among investors, but Nick is suggesting that a correction is to be expected based on historical patterns. Nick is confident in a $30,000 Bitcoin and is recommending short positions in anticipation of lower prices. Nick is also encouraging investors to stay informed about market developments and to use caution when trading.

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