Bitcoin ETF Sell-Off Started After Approval — Major Correction or a Minor Setback?
Bitcoin at the starting correction.
Key Takeaways
- Bitcoin gets rejected at a key resistance level, falling by 15% from January 11 when ETFs were approved.
- The hourly chart is showing a typical top pattern.
- There is a breakout seen from the ascending support.
Between January 11 and January 12, the price of Bitcoin fell by 15%, supporting the bearish prediction of a sell-off following the approval of a Bitcoin exchange-traded fund (ETF).
The decline came after a significant 75% increase in Bitcoin’s value over the 90 days preceding the ETF‘s first day of trading on January 11. This rally may have dampened investor enthusiasm, leading to a price correction to $41,620.
Traders speculate if investor sentiment is turning negative, especially after several unsuccessful efforts to surpass the $47,900 mark in the past week. So, was this the first sign of a major correction on the way, or just a temporary stopping point before new highs?
BTC Price Analysis
On January 11, the price of BTC reached its next significant horizontal resistance zone and briefly came up to $49,000. This zone was called for as the potential ending point of an uptrend from November 21, 2022.
And if you’ve been following our price updates on Bitcoin, this scenario in which we could have seen the completion of a five-wave impulse following a larger correction was anticipated for a long time.
Now that the price of Bitcoin has recovered by 215% from November 2022, this is the most likely outcome. If this was the first uptrend in a bull market, which undoubtedly is, now, according to the price action logic, we are to see the first bull market correction.
The only question here is whether this uptrend from November 2022 ended or whether the price has more strength to continue up before the start of this awaited correction.
The daily chart RSI shows a bearish divergence, with the price going up from December 11 while the RSI is a downtrend. It can be an early sign of weakness and a reversing trend.
Zooming into the hourly chart, we can see that the price moved to the upside in a five-wave manner from December 18, but with choppy and messy price action. This also indicates the weakening momentum, and with a breakout below the ascending channel’s resistance, we have another signal of a starting downtrend.
The rejection at the $49,000 was hard, and now BTC is on the lookout for support. But as the picture now stands, primarily, we would be expecting more downside movement in the short-term, which is going to validate our assumption of the larger starting downtrend.
Disclaimers
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
