Rudy Fares
Bitcoin was expected to breach 50K back at the beginning of April 2022. On the other hand, prices retraced lower and even broke an uptrend line lower. There are many factors that contribute to this drop, especially because of the strong correlation with the falling equity market. Why is Bitcoin down today? Is it a good idea to buy Bitcoin below 40K? Will Bitcoin go up soon? Let’s analyze 😉
Why is Bitcoin Down Today?
After the great crypto crash that started back in November 2021, Bitcoin price dropped from a high of $68,900 and reached a low of $34,000. Following this crash, Bitcoin and other cryptocurrencies started to recover. Bitcoin prices formed a parallel uptrend, which was the perfect setup for day traders. They basically short when prices reach the upper uptrend line, and buy when prices reach the bottom uptrend line. In figure 1 below, we specifically show the yellow areas where traders opened their positions. With a leveraged account, this could’ve made thousands.
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Bitcoin price is simply down as part of a price-action inside that parallel uptrend. Prices usually rebound inside that channel according to supply and demand. Because of the bearish outlook in the equity market, and because Bitcoin and cryptocurrencies are correlating with those markets recently, we saw a break of that uptrend channel. This brought Bitcoin into a strong buy area, delimited between $36,000 and $39,000 (green horizontal lines in figure 1).
Bitcoin Price Prediction – Will Bitcoin go back up?
Since the current correction is part of a natural adjustment, we can assume that a rebound should happen soon. This prediction is in place as Bitcoin prices are currently in a strong buy zone. In figure 2 below, we show how this important buy zone represented a consolidation for prices to get stronger before going higher. We did see several breakouts lower, specifically towards $30,000. But on the other hand, prices went back higher. Will this scenario happen again today? Let’s see what the possibilities are next.
2 Case Scenarios for Bitcoin Price
Scenario #1
Bitcoin might break the strong buy zone like what happened previously (fig.2) and reach the low price of $30,000. In case this happens, it would be a good idea to place a stop-loss around $36,500 to hedge this case scenario. Breaking $37,000 lower will bring prices to 30K.
Scenario #2
On the other hand, prices are looking towards stabilization in this case, and rebound higher to go back into the uptrend channel. This case scenario assumes that investors’ money flows into the crypto market, as the equity markets collapse further or stagnate. However, it is a good idea to keep the stop-loss level of $36,500 just in case scenario 1 occurs.
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