Bitcoin Price Dips to US$45,672: What’s the Short Term Outlook?

Bitcoin price dropped to an intra-day low at US$45,672, worsening the short-term outlook of BTC. Will the BTC price rebound from US$40,000? Let’s find out.

Bitcoin price dropped to an intra-day low at US$45,672, worsening the short-term outlook of BTC. Since the all-time high (ATH) at 68,789.63 on Nov 10, 2021, the price has corrected by over 33%. While the weekend rally made the crypto investors and traders hopeful of a bounceback, today’s intra-day low pushed the US$100,000 expectation a bit further into 2022 instead of 2021-end. 

The daily timeframe shows that the traders are still apprehensive of buying even in the recent most dips. The BTC price continues to struggle to break out away from the trend of daily lower highs. In fact, the 20-day moving average is still below the 50-day moving average. Some traders buy when BTC’s daily close above the 20 moving average and sell when the price falls below the 20-MA. This is a sign of a weakening short-term trend. 

Many momentum traders seem to be waiting for the bitcoin price to daily close above the MA at US$53,000 for opening their next long position. In fact, more risk-averse traders may be waiting for a clearer sign of a trend reversal, which is the 20 and 50 moving averages to converge. 

Is US$40,000 the Next Target?

It is a usual occurrence that the Bitcoin price makes head and shoulders, M-tops, and double tops after hitting new all-time highs. Some analysts have lately pointed out that they have witnessed a clear trend reversal pattern, a double top pattern. 

In the daily time frame, a start of a head and shoulders pattern can be seen. The right shoulder of this pattern will be completed after the current dips followed by consolidation. The most thing is that this head and shoulder pattern’s neckline is located at US$41,500. 

Interestingly, the neckline of this forming head and shoulders pattern aligns with the Volume Profile Visible Range (VPVR) indicator’s wide gap. It indicates that there will be an increased number of buyers at the US$40,000 level. 

However, currently, it is not quite possible to predict whether the BTC price will keep correcting and will bounce off from the US$40,000 level. 

The Twitter handle of on-chain analysis outlet Whalemap (@whale_map)  has tweeted:

“$BTC S/R update according to Volume Profile: 

$47k has been a good support lately but if we break it, our next strong support is at $40k.

On the other hand, if we are able to break $50.6k resistance the next one is all the way at $56k.

Let's see which set up is going to play out!”

In this tweet, they have asked traders and investors to keep a close watch at the US$40,000 level. It went on to say:

“Basically, if we start closing daily candles below the support outlined above, we will probably go to a lower one. The closest below us is around $40,000.”

However, MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) data on the daily timeframe shows an oversold position.

Bitcoin proponents say that the ongoing downturn is a temporary phase. They harp on it because more and more institutional and retail buyers are making crypto investments at every dip. The head of research with Pepperstone Financial Pty Ltd., Chris Weston, said:

“These once liquidity beneficiaries are the canary in the coal mine and what the Fed giveth, they are now gearing to take away… crypto has the added tailwind from the adoption story.”

Despite such a downturn, the 2021 YTD return is over 60% currently, which is far more than investment in any other traditional asset class including gold, stocks, and commodities. However, bitcoin’s extremely high volatility has put many traders away. Bannockburn Global Forex’s chief market strategist, Marc Chandler, has said:

“The idea that as it matured, the volatility would ease has not really materialized… The volatility is deadly and its other supposed attributes, like a hedge against inflation, seems spurious.”

Bitcoin price is currently testing support levels including the 55-week moving average of the token. The BTC price has already broken below a trendline that was formed from the start of its surge during the COVID-19 pandemic. 

The head of Asia Pacific, Luno cryptocurrency exchange in Singapore, Vijay Ayyar, has said:

“After any large move down, the market takes time to establish a base and that is what we’re seeing.”