Why The Latest Correction Is Good For Bitcoin
Bitcoin has finally corrected downwards after being on a bull rally for the better part of this week. This is an expected development for a digital asset that has grown so much in such a short time. However, while some in the market lament this downtrend, it is important to look at what a correction like this might mean for the digital asset. Because it may do more good than harm in times like these.
Is This Correction Bad?
For any upward recovery, there is bound to be a correction. This can be either good or bad depending on the circumstances surrounding the market movements. This time around, bitcoin has begun a recovery trend after making significant gains earlier this week. Now, for the present market, this looks to be more of a good thing for the digital asset given where the price has landed.
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Bitcoin had been able to hit as high as north of $47,000 during its last rally. This had helped to cement the cryptocurrency’s place in the bull trend. However, after building up so much momentum, there was bound to be a drawback and the result of that has been a declining value.
These kinds of corrections during bull rallies are always good. This is because they allow overbought indicators the change to reset their values to become good enough once more for investors. Paving the way for even more money to come into the market in the wake of the correction.
BTC support level at $45K | Source: TradingView.com
Naturally, there remains a support zone that the digital asset may not fall below, hence it becomes a problem for the asset. As long as bitcoin is able to hold above $45,000, then the power still firmly rests in the hands of bulls meaning that the cryptocurrency is likely to continue in its current bullish path. If this is the case, then bitcoin may very well see a big bounce coming. Most likely during the weekend when there is less liquidity in the market.
Bitcoin Needs To Hold
In the short term, bitcoin has no problems registering a bullish trend. The main pain point now remains to solidify this position over the long term and in order to do this, the digital asset has to beat the 100-day simple moving average. It is already trading above this but it remains a small margin. If the bottom of this correction can stop above $45,600, then this BTC will revert to a bullish trend over the long term.
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It remains a buyer’s market although how long this last will be determined by the performance over the next week. A proper break above $47,000 will once again set the stage for another massive rally. However, $48,000 will be a hard-fought battle given low momentum.
BTC trading above $45,000 | Source: BTCUSD on TradingView.com
Featured image from FXComfort, chart from TradingView.com