Top Reasons Why Bitcoin Price Poised For Retrace After Topping $65,000

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Top Reasons Why Bitcoin Price Poised For Retrace After Topping $65,000 – Crypto News

Published

1 year ago

March 4, 2024

Dripp

Bitcoin price alongside most altcoins is having an exciting start to the week, rising above $65,000 for the first time in two years. The leading cryptocurrency continues to reward investors who seem to be on board for the long haul eyeing the moon, considering the impact of the halving due in April and positive sentiment backed by well-performing Bitcoin ETFs.

Despite the bullish outlook, dips are not unusual during bull markets. Bitcoin price nosedived below $39,000 in January from highs around $48,000 as investors sold the ETF news after buying the approval rumor in Q4.

For that reason, this analysis aims to be critical of the prevailing market conditions to unearth possible reasons for a pullback to allow for re-accumulation ahead of a renewed upswing to new record highs.

1. Profit-Taking Activities

The majority of altcoins embarked on an upward trajectory last week and throughout the weekend while Bitcoin consolidated above established support at $64,000.

This consolidation allowed investors to take profits, redistributing to altcoins, especially large to mid-cap projects like Shiba Inu (SHIB) and Pepe (PEPE). Pepe is among the latest coins to reach a new all-time high.

As Bitcoin approached the previous all-time high near $69,000, investors will likely consider selling for profit to dollar cost average (DCA) as the price corrects.

The behavior of Bitcoin in the range between $65,000 and $66,000 could also determine how investors choose to react this week. A steady rise above $66,000 could create FOMO, boosting BTC to approach an all-time high.

Selling pressure may rise if Bitcoin price wobbles and fails to close the day above $65,000. Several four-hour candle closes below this level would mean increasing selling pressure and the possibility of Bitcoin price testing support in the range between $63,500 and $64,000.

2. Potential Double-Top Pattern Sell-Off

The largest cryptocurrency will be facing a new sell wall as it nears the record high. During the previous bull run in 2021, Bitcoin topped out around $69,000 leaving the $70,000 level untested.

Investors who purchased BTC at the peak of the last bull run may want to sell at the breakeven price, intensifying the selling pressure. In the absence of a correction due to enhanced sentiment, consolidation may take precedence. In other words, Bitcoin may rise to a new ATH followed by sideways doldrums between $60,000 and $70,000 going into the halving period.

3. Bitcoin Price Overbought Market Conditions

Bitcoin has not slowed down the rally that started soon after January’s sell-off below $39,000 apart from short periods of consolidation for re-accumulation. The Relative Strength Index (RSI) is noticeably overbought at 86, observed on the four-hour chart. An RSI reading between 70 and 100 suggests that bulls are in control but a reversal may be approaching.

Any semblance of the RSI returning toward the neutral region would mean that a correction is due. Combined with other indicators like Moving Average Convergence Divergence (MACD), the RSI can be used to back the uptrend or in this case, a trend reversal.

If a correction materializes blockchain analytics platform IntoTheBlock, highlights the area between $61,211 and $63,166 to be Bitcoin’s strongest support.

IntoTheBlock's Bitcoin IOMAP Chart — IntoTheBlock’s Bitcoin IOMAP Chart

Approximately 1.38 million holders purchased 539k BTC at an average price of $62,086. Buying within this range could prove beneficial to bulls in the long run, considering the high impact on the price by the ETFs and the halving.