Bitcoin prices experienced a slump on Sunday April 18, 2021 after a tweet (now dismissed as false) set off a selloff spree not seen in the cryptocurrency market. This tweet put out an unfounded rumour about an investigation into money laundering by several cryptocurrency projects. This drove market fear that saw Bitcoin fall from $62,000 to as low as $50,000 before recovering to its present levels.
On April 22, news from the US government on the implementation of a 39.6% capital gains tax on wealthy Americans also triggered a short term selloff. This sent Bitcoin prices to as low as $46,000, but prices quickly recovered on April 23.
Prior to this slump, Bitcoin prices had experienced a massive upsurge, which was engineered by the entry of several institutional players such as Grayscale and Square, into the cryptocurrency market.
Following any massive price appreciation, some correction is expected. Our outlook sees the current Bitcoin price slump as a corrective move which will eventually make it possible for traders to acquire Bitcoin at cheaper prices.
This scenario presents the best possible buying re-entries for those who were priced out when Bitcoin traded above $60,000.
The bullish trend remains intact, as price was able to hold at key support areas and formed the higher lows/high that confirmed the uptrend. Our outlook is for price to drop below 50,000 in the short-term, but this would present good re-entry opportunities for traders looking to catch the recovery at cheaper prices.
The weekly chart of the BTC/USD pair shows that the Bitcoin price action is in an uptrend, as it continues to form higher highs and higher lows. The uptrend sequence followed a 3-year consolidation period that saw Bitcoin prices oscillating between 3600 and 13330.
The presence of an ascending channel on the weekly chart is also noted. This channel demarcates an area which is consolidating to the upside. Price is also seen to have bounced off the support formed by the channel's lower border, which places the low of the active weekly candle at a higher position than the previous weekly candles, thus cementing the uptrend.
The daily chart shows that the price candles appear to have found support at the 50,116 price level, which is very close to the 50,000 psychological support. However, the active daily candle is presently pushing against the current support level, thus putting it at risk of a violation and a breakdown.
Barring any breakdown of this support level which brings the 78.6% Fibonacci extension (swing move from 10 December to 8 January 2021) at 48270 into focus, Bitcoin price is expected to get further uplift from the 50,000 psychological support level. This uplift could target immediate upside resistance barriers at 56071 and 60112 in the first instance. Further dip-buying opportunities also exist at 46203, 44138 and 41000. Any form of price retreat to these areas could see a strong bounce, which could be the impetus that buyers need to generate momentum to resume the uptrend recovery.
If 60112 is taken out, the next target for bulls would be the current all-time high at 64800. If this area is taken out, then we could see a march towards new all-time highs between 68,000 and 70,000, where the BTC/USD price candle are expected to meet the channel's upper border.
A break of the existing all-time high forms the higher high needed to continue the uptrend.
Long-term and medium-term, BTCUSD’s trend remains bullish as the price continues to form higher highs and higher lows. In the short term, the price candles continue to exert downside pressure on the 50,000 support level. It is believed that there will be further bearishness in the short term to suitable support levels below 50,000, which will serve as dip-buying areas for uptrend resumption.