Analyst outlines possible Bitcoin correction levels before rally to $65,000

Leading RoboForex analyst Dmitry Gurkovsky discusses possible further scenarios for Bitcoin’s price movements.

After another update of the all-time high, BTC/USD moved into a deep correction from the $58,350 level. Many traders who bought the asset at the peak again found themselves in a worse position — as the drop exceeded $13,000.

Seasoned investors recommend buying during sharp declines in the asset’s price, so it is quite probable that the current correction will present an opportunity to enter the cryptocurrency market profitably.

On the daily chart, the price tested the fast moving average. Earlier, during a strong bearish correction when it fell to the $28,620 level, there was also a tight test of the area between the moving averages. After that, the price continued to move within the uptrend.

An important support zone lies between the $42,200 and $44,800 levels. The lower boundary of the rising channel also passes there, so if prices approach it again, one should consider a solid bounce upward.

The nearest upside target is the $65,000 level.

The catalyst for the current movement of digital currencies was Elon Musk’s remark about the high price of Bitcoin and Ethereum. Tesla shares also fell sharply, reaching $618, the lowest level since September last year. Investors began blaming the company for this ‘slump’ given its prior large Bitcoin purchases.

Meanwhile, some analysts note a negative tone toward cryptocurrency during Janet Yellen’s remarks, which could have exerted significant pressure on Bitcoin and the broader crypto market. The rhetoric of the US Treasury secretary is no different from that of central bank chiefs, who are also concerned about Bitcoin’s high volatility and that such assets are often used for “money laundering” and tax avoidance.

At the same time, many former bears already acknowledge strong growth in cryptocurrencies and are not prepared to take short positions in these assets. Bill Gates said that his stance toward Bitcoin as an investment vehicle is now neutral.

In 2018 this well-known entrepreneur repeatedly spoke in favor of shorting BTC. Now he warns against blindly following Elon Musk’s recommendations, noting that he has a huge amount of funds compared with ordinary investors.

Michael Burry holds a similar view on the short-term growth of the entire crypto market. But he is not ready to enter into selling trades of digital currencies, despite the risks of government pressure on these assets.

On the 4-hour chart, RSI readings in February of this year fell below 30 for the first time. Previously, such RSI declines indicated the end of bearish corrections and the continuation of bullish impulses. However, another move toward the $44,800 level and the start of a rise after an upward rebound should not be ruled out.

In this case there is potential to form a reversal pattern—the ‘Double Bottom’—and an additional signal in favor of growth would be a test of the lower boundary of the rising channel by price. A bearish correction should be anticipated only if the lower boundary of the rising channel is breached with the price staying below $40,000. In that case, the downside target could be $29,000.

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