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After a solid rally there will always be a correction, it is in the nature of markets. Bitcoin’s parabolic surge to just under $14,000 in barely three months had to end somewhere and this week that pullback has deepened. Most are confident that a new bull market has been established so new buyback zones are being sought and the moving averages could be key again.
Bitcoin Back Below $10k
The correction has accelerated today as BTC fell back below $10k, hitting $9,950 twice over the past few hours. On the hourly chart the digital asset has already fallen below the 50 and 200 moving averages and it is trading between them on the 4 hour chart. It is clear that the current 25 percent correction is not over as BTC continues to fall.
Bitcoin has lost another 7 percent today and is currently trading just above $10k but may not stay there for much longer. Daily volume is trailing off and is currently back below $28 billion as lower lows start to appear on the hourly chart.
The daily chart is still looking very healthy however so a retrace back to $8k would not be such a bad thing.
10 EMA On The Weekly Chart
Looking at the longer term picture on the weekly chart, the 10 EMA has come into play several times in previous market cycles. At the moment this lies at around $8,800 so a test of this would not be out of the question.
“All things must come down and retest the moving averages. Is it time for BTC to test that 10 ema? If you are wanting a dip buy, that is the area to watch for, IMO.”
$BTC Weekly Chart.
All things must come down and retest the moving averages. Is it time for BTC to test that 10 ema? If you are wanting a dip buy, that is the area to watch for, IMO.#BTC pic.twitter.com/coxpTVms5r
— CryptoFibonacci (@CryptoFib) July 2, 2019
This would result in a correction of 36 percent which is definitely plausible. Even a deeper pullback of 40 percent to $8,200 would not be that worrying but a fall below $8k for BTC should start to ring alarm bells and may result in a questioning of the validity of the bull market.
Crypto trader ‘SalsaTekila’ concurs that Bitcoin needs to remain above $8,100 to keep the uptrend intact. Buying the dip between $8k and $8.5k appears to be the plan here.
“To me, we remain in a bull-market for long as price trades above 8100-8500$ on a HTF closing basis. I will be worried about a catastrophy scenario only IF we start closing below 8100$ on HTF candles. This implies I’ll look to #BTFD around 8100-8500$ if we get a first test.”
Many industry heavyweights are still full of confidence for the long term scenario for Bitcoin. The fact that it has hit five figures just a few months from being on the floor, 84 percent down from its all-time high, is a testament to the resilience of this crypto asset.
Image from Shutterstock
