Cryptocurrencies are in the red since the weekend sell-off that saw Bitcoin price drop from near-all-time high levels to $66,000. Some semblance of stability was witnessed on Monday, however, volatility did not easy triggering more widespread losses on Tuesday.
After correcting by 8.6% in 24 hours, BTC price holds at $62,500. Altcoins including Ethereum have also corrected significantly, thanks to their recent affinity to Bitcoin price action.
A 63% increase in the trading volume to $67 billion suggests that investors are more interested in selling BTC than buying. The noticeable drop in the market cap to $1.24 million mirrors the intense selling pressure.
Bitcoin Price Prediction: How To Navigate BTC’s Pre-Halving Retrace?
The setback due to the Bitcoin crash from its record high topping $73,000 has seen both the technical and fundamental factors shift drastically. Blockchain data by IntoTheBlock, showing the demand and supply of the coin reveals new solid resistance zones, as observed in the chart below.
The IOMAP model reveals current important resistance bands, starting with $64,960 to $66,845, $66,845 to $68,730, and lastly $70,615 to $72,500. Unlike last week when Bitcoin reached a new historical high, approximately 58.15% of all addresses are in loss, or out of the money.
It is unclear when Bitcoin will end this retreat and embrace a major recovery, especially with support areas (green circles) appearing smaller in the IOMAP model compared to resistance zones (red circles).
For now, Bitcoin price has stabilized above $62,500 support and is hovering at $63,515. The Relative Strength Index (RSI) at near oversold areas means that the sell-off was intense and a trend reversal is possible.
Traders are also cautionary about buying the dip immediately due to the fear of being liquidated. According to Coinglass data, total liquidations in BTC reached $191 million in the last 24 hours of which only $44 million was in short positions. Cumulative liquidations across the market stand at $664.5 million.
How To Navigate Bitcoin’s Tumble
The four-hour chart hints at a possible major support around $62,000 reinforced by the 200-day Exponential Moving Average (EMA). Bitcoin has already respected this level, giving bulls a chance to assert their control and take back the reins for a major turnaround.
Should losses overwhelm the demand at $62,000, BTC will have another chance at $60,000 bolstered by the lower ascending trendline. Further correction below this important support would imply that Bitcoin would have completed its typical 20% pre-halving retrace, reaching $57,500.
Bitcoin’s rally in the last few months has been fuelled by the approval of spot ETFs in the US. Demand for ETF products has increased significantly underpinning growing interest among institutional and retail investors.
In addition to pampering the market with positive sentiment, ETFs have increased demand for Bitcoin. Thus, creating the right supply and demand dynamics for a rally past $73,000.
The ongoing sell-off, on the other hand, can be attributed to investors taking profits ahead of the halving in April. After the halving, it is anticipated Bitcoin will pump prices like never before rising on the ETF sentiment, reducing supply and surging demand.
If investors focus on buying the dip, further decline below $60,000 may be invalidated, paving the way for another run above $70,000. It is essential to keep in mind the IOMAP levels highlighted. With that traders can avoid falling into bull traps and their positions being liquidated.
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