Bitcoin First Close Above $100K, But Is A Big Correction Coming?
Bitcoin (BTC) closed the week above the $100,000 mark for the first time in history, capping off a big week for the cryptocurrency with another milestone. However, one market observer warned investors that historical patterns could soon lead to a sharp correction in the flagship cryptocurrency.
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Bitcoin closes above $100,000 in first week
Bitcoin reached the $100,000 milestone nearly a week ago, breaking a psychological barrier for the first time. After huge gains, the largest cryptocurrency by market capitalization is facing its biggest drawdown since Trump’s victory in the U.S. presidential election.
BTC fell about 13% to the $90,000 mark at one point, similar to its performance when it first hit the $10,000 mark. The cryptocurrency has since been hovering between the Prince range of $97,000 to $101,000, with a breakout of the upper portion of the range facing some resistance.
as report Jelle, a cryptocurrency analyst at NewsBTC, noted that BTC may follow the same path as its post-$10,000 milestone, turning the newly broken level into support three days later, as it did in November 2017.
After hovering in a new range for four days, Bitcoin closed above $100,000 for the first time on Sunday. This performance also marks its first weekly close above that mark, similar to the weekly performance of the $10,000 candle.
Cryptocurrency Analyst Rekt Capital Highlight BTC’s daily close above this level and Monday’s 2.5% pullback are a “technical retest” of this level. However, the ongoing retest is very volatile and has spent the past two days trying to turn the “final major daily resistance” near the $98,000 area into support.
The analyst added, “A retest of volatility like this makes sense, especially on a weekly basis.” He explained that resistance at $98,000 on the weekly chart was broken after yesterday’s close, which means “The focus this week is on trying to recapture this level as new support.”
Will Bitcoin have “troubles” in the coming weeks?
Despite breaking a key barrier, Rekt Capital is warning investors that Bitcoin is set for a post-halving “parabolic phase” in the coming week. Previous Analyst explained Bitcoin enters a parabolic cycle after each halving event, with each cycle lasting approximately 300 days.
Historically, Bitcoin’s price has seen its first major correction one month after entering price discovery mode. According to analysts, the first “price discovery correction” in history begins between weeks 6 and 8 of each parabolic phase, with at least a 25% retracement.
Rekt Capital noted that today begins the sixth week of the post-halving rally phase, highlighting BTC as the time frame for a significant price correction. Based on this, the price of Bitcoin may sharp decline In the next few weeks, this number will be between 25% and 40%, just like in 2017.
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The analyst warned investors that a current retest of the $98,000 level is key, as failure to hold there could trigger the first major correction:
So, over the next 3 weeks or so, I would be increasingly cautious about retest attempts, and given BTC’s history at this point in the cycle, I wouldn’t be surprised to see key levels invalidated.
Nonetheless, he stated that a “second price discovery uptrend will occur after a price discovery correction,” which could push BTC to a new ATH.
As of this writing, Bitcoin is trading at $98,073, down 2% in the past 24 hours.
Featured image from Unsplash.com, chart from TradingView.com
