Bitcoin is currently in price discovery but a drop to the $18,500 region in the short term shouldn’t be ruled out.
Bitcoin (BTC) price has seen a massive rally in previous months, accelerating from $10,000 to a recent all-time high of around $23,700. This is a rally of 135% in just a matter of a few months.
It’s speculative to discuss where the price of Bitcoin could run from here. However, certain levels must be held for this rally to continue. Additionally, several indicators can be useful for analyzing the charts and anticipating potential areas of interest in price discovery.
Continuation is likely to $25,800 if this level holds
The daily chart for Bitcoin shows a massive breakout above $19,500. This rally led to a temporary top of $23,500 but automatically turned the $19,500 level into a critical level to hold.
The chart also shows a clear support/resistance flip of the $16,000 level, triggering further upwards pressure leading to the breakout. Based on the daily timeframe, the recent higher low is made around $17,500. As long as Bitcoin sustains above that level, the uptrend is intact and continuation is likely.
The Fibonacci extension tool is useful to define the potential short-term top of the rally. The first Fibonacci level is the 1.618 Fibonacci extension at $22,100, which has been surpassed. This means that the market is currently seeing an immense amount of buy pressure.
The next level of interest is found at $25,800, the 2.618 Fibonacci level, which could be the next marker for a potential top.
Such vertical rallies aren’t sustainable for long. Thus, a correction will occur at some point. However, predicting when it happens is anyone’s guess as Bitcoin may easily run to $30,000 and then see a 30% correction.
Total market cap continues to climb
The total market capitalization of cryptocurrency shows a massive upward breakout in the previous months, largely fueled by Bitcoin hitting its new all-time highs.
Following BTC’s footsteps, the total market cap is now approaching the final hurdle before going into price discovery.
Just like Bitcoin, there are important levels to watch for a potential correction. The first is found around $550 billion, which could serve as support for the pullback. If that doesn’t hold, the next levels are $435-$445 billion and $380 billion.
Are altcoins finally starting to run?
Historically, Bitcoin dominance tops out in December, after which a strong quarter starts for altcoins.
To have such a strong quarter for altcoins, Bitcoin has to correct and stabilize, as that’s the best nature for altcoins to act in. Therefore, as history shows us, the next quarter could be a significant quarter for altcoins.
Bitcoin short-term outlook
The weekly Bitcoin chart shows a massive vertical run in the previous months, which frequently ends in a violent correction just like three years ago.
As stated already, nobody knows when this big pullback will occur. Bitcoin may continue running to $30,000 before it starts to correct. However, the primary level to watch in this correction is the region around $18,500, as the chart shows.
As long as that level holds, both Bitcoin and other cryptocurrencies will likely keep climbing with the total crypto market cap going into price discovery just like BTC.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.