What’s next for Bitcoin after the correction?

Bitcoin, the world’s first and most popular cryptocurrency, has been experiencing a significant correction over the past few days after hitting an all-time high of over $49,000 on January 19, 2024. As of January 21, 2024, Bitcoin is trading at around $41,000. It fell about 15% from its peak.

Bitcoin price prediction

Bulls are working hard to attempt a breakout.

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The main factors behind Bitcoin’s decline are:

Cash Bitcoin exchange-traded funds (ETFs) have launched in the U.S. and Canada, attracting more institutional and retail investors to the cryptocurrency market. But some analysts believe this has also led to oversupply and downward pressure on prices.

There has been an increase in regulatory scrutiny and legal challenges faced by some cryptocurrency companies and projects, such as FTX, which has been accused of fraud and money laundering by U.S. authorities. This has raised concerns about the legal status and risks of cryptocurrency investments.

Technical resistance is $42,000, which has been tested several times over the past week but failed to break through. This level is consistent with the 50-day moving average (MA) and the 61.8% Fibonacci retracement level of the November-December rally. A break above this level could signal a reversal in the downtrend and open the door to further upside.

Weekly Price Analysis

Looking at the weekly chart of Bitcoin (BTC/USD), we can see that it is still in a long-term uptrend, staying above key moving averages (MAs) and trend lines. Weekly RSI is around 50, indicating balanced market conditions.

However, we can also observe some bearish signs in recent weeks.

The weekly MACD crosses below the signal and zero lines, indicating bearish momentum.

Weekly trading volume has been decreasing since December 2023, suggesting a lack of buying interest.

Weekly candlestick patterns are mostly bearish or neutral, with no clear bullish or bearish signals.

Therefore, we can conclude that Bitcoin is facing several short-term issues that could limit its upside potential in the near future. However, we must not lose sight of long-term fundamentals and prospects.

future prospects

Bitcoin’s future prospects depend primarily on a number of factors, including:

The adoption rate and level of innovation of Bitcoin as a global payment system and store of value.

It competes with other cryptocurrency and blockchain platforms that offer faster transactions, lower fees, higher scalability, and more features.

Regulatory environment and legal framework for cryptocurrency in various countries and regions.

Sentiment and behavior of investors, traders and consumers towards cryptocurrencies.

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Based on these factors, we can anticipate several possible scenarios for Bitcoin price movements in the coming months.

If Bitcoin continues to hold support levels above $41,000 and shows signs of recovery during the correction phase, the resistance level of $45-$50 could be targeted in February or March. This scenario requires positive news from regulators or institutions that can increase confidence in the cryptocurrency market.

If Bitcoin fails to break the $42,000 resistance level or decisively falls below the $40 support level, it could enter a deeper correction phase below the $35-$30 support level. This scenario requires negative news from regulators or institutions that could trigger panic selling or fear among cryptocurrency investors.

If Bitcoin breaks the $42,000 resistance level on strong volume, it could resume its upward trend above the $50-$55 resistance level. This scenario requires positive news from regulators or institutions that could boost adoption or innovation in the cryptocurrency market.

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