Bitcoin has finally corrected downwards after being in a bull rally for most of this week. This is an expected development for a digital asset that has grown so much in such a short time. While some in the market may deplore this downtrend, it’s important to look at what a correction like this could mean for the digital asset. Because in times like these it can do more good than harm.
Is this correction bad?
For any upward recovery, there is inevitably a correction. This can be good or bad depending on the circumstances surrounding the market movements. This time, bitcoin has started a recovery trend after making significant gains earlier this week. Now, for the current market, this seems to be more of a good thing for the digital asset, given where the price has landed.
Related literature | Bitcoin Mining Difficulty Eyes New ATH as Block Production Increases
Bitcoin was able to reach north of $47,000 during its latest rally. This had helped cement the cryptocurrency’s place in the bull trend. However, after building up so much momentum, there had to be a downside and the result was a declining value.
These kinds of corrections during bull rallies are always good. This is because they give overbought indicators a chance to reset their values to become good enough for investors again. Clearing the way for even more money to hit the market in the wake of the correction.
BTC Support Level At $45K | Source: TradingView.com
Of course there remains one support zone that the digital asset should not fall under, hence it becomes a problem for the asset. As long as bitcoin is able to hold above $45,000, power still rests firmly in the hands of bulls, meaning the cryptocurrency is likely to continue on its current bullish path. If this is the case, bitcoin could very well see a big bounce coming. Most likely during the weekend, when there is less liquidity in the market.
Bitcoin must hold
In the short term, bitcoin has no problem registering a bullish trend. The main pain point now remains to solidify this position over the long term and to do so, the digital asset must beat the 100-day simple moving average. It’s already trading above this but it’s still a small margin. If the bottom of this correction can stop above USD 45,600, then this BTC will revert to a bullish trend in the long run.
Related literature | Possible Timelines For Bitcoin To Reach $100k: Why CEOs Are Seeing Bullish Signals
It remains a buyer’s market, although how long this will be determined by next week’s performance. A good break above $47,000 will once again pave the way for another massive rally. However, $48,000 will be a hard-fought battle given the low momentum.
BTC trades above $45,000 | Source: BTCUSD on TradingView.com
Featured image of FXComfort, chart from TradingView.com