Market Analysis

Bitcoin price correction continues, dashing hopes of $20K in 2020

Bitcoin (BTC) continues to be in correction mode with BTC price dropping below $17,600 on Dec. 11, the lowest level since November. 

Bitcoin in a downtrend on lower timeframes

Every beautiful rally comes to an end and gets followed by a corrective period. This correction seems to have started with the price currently down more than 10% since touching a new all-time high ten days ago. 

Meanwhile, some recent news namely the proposed crypto regulation in the United States is bringing fear to the otherwise euphoric market. However, other markets have also suffered this week with equities also cooling off.

BTC/USD 4-hour chart. Source: TradingView

The 4-hour chart is implying a clear downtrend. Such a downward trend is confirmed by lower highs and lower lows, as shown in the chart.

First, Bitcoin’s price couldn’t break through the all-time high region, after which $18,500-18,700 acted as a strong support area for a week.

Every bounce from this region (as the arrows show) marked a weaker bounce, as lower highs were constantly formed. After three tests, the support failed, and Bitcoin’s price fell through to the next support level between $17,600-17,800.

This support zone initiated a slight bounce to $18,500-18,700. To become bullish, this zone had to flip for support, which it failed to do. This rejection confirmed the bearish support/resistance flip, after which the downtrend resumed.

Overall, the downtrend will post lower highs and lower lows always until a clear bottom is found. It doesn’t seem like the market will discover it shortly, however, as higher timeframes are also eager to turn south.

Bearish divergence on the daily timeframe getting confirmed

BTC/USD 1-day chart. Source: TradingView

The daily chart indicates a potential bearish divergence ready to be played out. This bearish divergence will be confirmed when the price of Bitcoin falls to break through $18,600-18,800.

In that sense, a previous resistance becomes resistance again, confirming the markets’ overall weakness and more downside becoming likely.