Bitcoin, along with the larger crypto-market, dropped the ball after the most recent price fall had echoes of 19 Mays crash. With BTC shedding 25% of its value in a matter of a few hours, the market seemed to reset to its September-end levels. While it was trading around the $49k-mark at press time, for a brief moment, it did tread close to $42,000 too.<\/p>\n
The aforementioned price fall led to a mass wipeout, giving way to over $2.5 billion liquidations across the market. Ergo, the question Does the macro bullish outlook for Bitcoin remain intact?<\/p>\n
On the daily chart, Bitcoins price had been in a falling wedge structure since the 16 November crash. Looking at the larger structure for the past month, it can be argued that the latest crash to the $42k level was overdue. <\/p>\n
On zooming out, a look at BTCs weekly chart highlighted how after the 4 December crash, the price broke the MA 50 trend-line.<\/p>\n
During the previous major corrections too, the price had broken below this level in May and then again, in late June. However, it has always managed to hold it. <\/p>\n
In fact, this level has acted as a support for the +100% rally from July to November. Thus, as long as the weekly closes above or at least around the 1W MA50, BTCUSD has a legitimate probability of forming support there and starting a new rally.<\/p>\n
Interestingly, an RSI fractal seemed also to be in play here. As noted in the chart above, a similar RSI structure was seen from mid-2019 to early 2020, as seen from early 2021 to the time of writing. The key catalyst in both cases was the sell-off due to COVID fears. <\/p>\n
However, this crash was more of a combination of multiple factors like the panic among retail investors, tech market crash, over-leveraged crypto-markets, high Open Interest, positive funding rate, and so on.<\/p>\n
For now, while the price has rebounded, another fall to the lower $40k-level cannot be discarded. <\/p>\n
However, BTCs two main utility indicators continue to rise A good signal. BTCs token circulation and its daily active addresses, at press time, sat at a 6-month high. In fact, they seemed likely to continue their uptrend too.<\/p>\n
Furthermore, the estimated leverage ratio dropped by 22% in just one day. This was last seen in September when the price dropped by 24% and touched $40k. <\/p>\n
In case a similar rally follows and BTCs price makes a similar structure, the next minimum target of $75k for Bitcoin towards the end of January 2022 can be expected.<\/p>\n
At the time of writing, the biggest takeaway as BTCs price rebounded from its lower levels seemed to be that the market dynamics have been looking very different than previous cycles. <\/p>\n
Even though volatility was still high, the market seemed to move from FOMO-induced price tops and sell-offs to more mature and sustainable growth while flushing leverage. Nonetheless, with the price structure still tilting towards bearish, despite the bounce, it would be best to be cautious. <\/p>\n
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