$60K or $40K: Where Will the Bitcoin Price Go in the Next Few Days?
The current situation is uncertain.
|Sylvain Saurel||Mar 4||1|
The end of February 2021 marked the return of high volatility in the Bitcoin world. After reaching a new All-Time High (ATH) of $58.3K, the price of Bitcoin then experienced a significant correction bringing its price down to $43K.
A correction of -25% was followed by a sharp rebound above $50K.
This correction was quite normal in a Bull Market like the one we have known since the beginning of October 2020. The return to above $50K in the early days of March 2021 made some people think that the correction was over.
For the most optimistic, the rise in the price of Bitcoin to $60K could resume.
It was clearly without counting on resistance around $52K that the price of Bitcoin failed to break on March 3, 2021. This was followed by a return to below $50K with a test in the progress of the $48K support.
It may even be that the price of Bitcoin will remain stuck in the $48K to $52K range for some time. As long as $48K holds, a new test of $52K support is very likely. If the $52K resistance were broken, it would have to go above the $55K resistance for Bitcoin to try conquering the $60K again.
We are not there yet.
March is usually a bad month for Bitcoin. It is known as a bloody month. History never repeats itself, but it often rhymes as Mark Twain said. Why should it be different this time?
Yes, I know, it is different this time… But stay cautious.
In addition to this self-fulfilling prophecy, various macro elements could bring the price of Bitcoin back to around $40K before it reaches $60K.
The first reason is the rise in the 10-year rate of U.S. Treasury bonds. They have just reached a one-year high:
The rise in the 10-year rate will encourage investors to diversify further. Many will exit stock market positions, now that the TINA ("There Is No Alternative") effect seems to be fading.
These same investors may begin to move away from Bitcoin and gold as well.
However, it remains to be seen whether this rise in rates will continue. A further drop to 1% could put Bitcoin back in the favor of some retail investors. It's all about balance here. And it is very uncertain at the moment.
Announcements from the Fed are also likely to tip the balance one way or the other. Whatever happens, the Fed still has the keys to the game. This is why the saying is often repeated:
“Don’t Fight the Fed.”
At the macro level, it is also interesting to look at the U.S. Dollar Index (DXY). It measures the strength of the U.S. dollar against a basket of major foreign currencies. After reaching a two-year low in December 2020, the DXY seems to be regaining some vitality:
Everything is still uncertain here. The balance is precarious, and the DXY can fall back at any time. This is something to observe from the corner of your eye. As you can see, the weakening of DXY in the second half of 2020 coincided with the significant increase in the price of Bitcoin.
So in the coming days, you need to focus on these different points. This will give you clues to better understand the evolution of the price of Bitcoin in the short term.
If Bitcoin were to plunge below $48K, important support would be tested again: $44K. Below this support, we would go to the $39K level. An interesting opportunity to accumulate more BTC at a price that will look extremely cheap in a few months.
Indeed, even if Bitcoin was close to $40K before going to $60K, we would still be in a Bull Market. Don't fall into the error of CNN, which had hastily announced a Bear Market for Bitcoin following a 20% drop in its price in 48 hours.
In the world of Bitcoin, this is classic. As you now know, Bitcoin's volatility is a feature, not a bug. It's up to you to take advantage of it by making the right decisions.
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