Over the past 24 hours, the Bitcoin price has experienced a 2.05% dip after nearing the $70,000 mark. This decline raises concerns that yesterday’s bullish breakout from a seven-month descending channel may have been a false signal.
This price lapse follows a strong week for Bitcoin, retaining a 3.47% gain since last Thursday.
However, the dip has somewhat shaken the much-heeded “Uptober” sentiment, pushing the broader altcoin market into the red.
Despite this volatility, the broader sentiment around Bitcoin remains optimistic.
Trading volume has remained robust, hovering around $28 billion, and Bitcoin futures have continued to see significant activity, reflecting sustained interest and confidence from investors.
Bitcoin Price Analysis: Bullish Correction or Bearish Reversal?
Upon closer inspection, it appears that Bitcoin was destined to correct following its breach into overbought territory.
BTC / USDT 1D Chart, staggered Descending Channel Breakout. Source: Binance.On Sunday, the relative strength index (RSI) peaked at 70, a level considered indicative of overbought conditions. Therefore, Monday’s push lacked stability, leading to a sharp decline as the RSI returned to more steady footing at 61.
Although today’s return to 58, a more neutral territory, may suggest that the excess of the previous days has been completely exhausted, it is important to note that just over ten days ago, the RSI was below 45.
This rapid fluctuation underscores the volatility in Bitcoin’s price. In just 11 days, the price of Bitcoin has risen above $69,000, arguably excessively fast without solid fundamental backing.
Where Could Bitcoin Go From Here?
At this moment, there is likely a race among speculators to be the first to enter in advance of the potential increase related to the U.S. presidential elections, especially as a Donald Trump victory becomes more probable.
Historically, the election-related rally tends to start around October 20th or shortly before.
However, this year it seems to have started shortly after the 10th, indicating a small excess of anticipation highlighted by the rapid rise from less than $59,000 to more than $69,000.
Observing the past few days, the most stable level seems to be $67,000. Yesterday, the price fell below this level but then quickly moved back above it, potentially indicating that BTC may have already found a bottom.
Influential pseudonymous trader Rekt Capital highlighted this as par for the course, noting that Bitcoin will likely take a slight lapse “for additional buy-side liquidity” to steady its footing after the unsuccessful attempt at $70,000.
More worryingly, though, the daily MACD line appears to be losing its footing as it converges back toward the signal line, a move that has historically led to downside for Bitcoin.
Therefore, the next critical inflection point will be a retest of the support around $66,500. A bounce from this level will reinforce this lapse as a correction and prevent a further slip with a MACD crossover.
Conversely, if it fails, the Bitcoin price may lapse to lower support around $65,000.
Despite this near-term volatility, the medium to long-term outlook for Bitcoin remains optimistic as a potential escape from Bitcoin’s multi-month downtrend, though staggered, is still in play – eyeing a breakout to all-time highs.
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