Within 24 hours, bitcoin loses more than 8.5% of its value on eToro. A sudden drop that prompts several observers to question the rise of bitcoin at the end of the year. Even the famous optimistic bitcoin forecaster, Plan B had to revise the ultra bullish monthly closings of its statistical model “ Stock to Flow “. However, inflation had paved the way for the rally.
What is happening to bitcoin? Should we be worried about his last correction?
The foreground: Inflation, new ATH, retracement and trading range
After a historic monthly close at $ 61,318, bitcoin started November in the consolidation zone after its plus October high of $ 66,930. The first cryptocurrency on the market was running out of steam. The alts took over and in turn took the opportunity to set new stock market records. Shiba Inu, BNB, Solana and Polkadot were showing historic levels.
The king coin will have waited until November 8 to regain control of the situation. His price had gone from $ 63,326.99 to $ 67,566.83 in 24 hours. Two days later, he signed a multi-year ATH at $ 69,044.77. This bitcoin push had been fueled by the galloping inflationary situation in developed countries. In the economy across the Atlantic, the level of the CPI has never been so high for almost 30 years. It should be remembered that in 2021 alone, the American Central Bank printed 35% of the dollars in circulation since 1971 when the international monetary system broke with the gold standard.
Bitcoin and other cryptocurrencies, considered to be an inflation hedge, are taking advantage of the situation. At the same time, it was found that gold, which is by nature a safe haven par excellence against inflation, had not been able to recover from what had been the ideal catalyst. Suddenly, we thought that the die was cast: the best hedge of tomorrow is bitcoin not gold.
Open the champagnes, the cryptophiles were already celebrating the crossing of the 72 000 $ but it was without counting on the resistance in the zone of 67 000 $. Bitcoin’s price had retracted from its new ATH to $ 64,000. There had been some attempts to reverse resistance, but bitcoin’s price was instead comforted in a range while waiting for any good news to resume rising. There was one: the “Taproot” update but the latter had no positive effect on the price of BTC.
The context: Bitcoin suffers from the tides of American and Chinese regulation
Yesterday the US president signed the $ 1.2 trillion mega infrastructure plan. Within this budgetary policy, the American legislator provides for a tax on cryptocurrencies, NFTs and other digital tokens. Crypto legislation is keen for brokers to postpone transactions greater than $ 10,000 with the Internal Revenue Service.
This news created quite a panic in the cryptocurrency market. Massive liquidations followed. Indeed, since well before the October bull run, experts had indexed this factor as being an unfavorable element to the rise of cryptos. However, some observers believe thatin the long run, this American-style regulation would not be too harmful for the cryptoverse.
For its part, China continues to tighten the stranglehold on cryptocurrencies. This time, she intends to go much further by applying punitive electricity tariffs against minors. The Middle Kingdom believes that the crypto industry has no advantage for its country either at the technological or scientific level. Meng Wei, a spokesperson for China’s National Development and Reform (NDRC) told CNBC:
Mining results in high energy consumption and carbon emissions. It has no active impact on the development of industry or scientific progress. The regulation of cryptocurrency mining activities is of great importance for optimizing our industrial structure, saving energy and reducing emissions, achieving carbon emissions and neutrality targets.
Meanwhile, the e-Yuan continues to grow in Chinese territory. You have to be naïve to buy into the climate argument put forward by the Chinese authorities. In any case, only the future will tell us if they were right to favor their CBDC. Would the Digital Yuan allow them to break out of dollar dominance?
At the same time, two old enemies of cryptocurrency timidly take to the stock market. The DXY index (dollar symbol) is up 1.13% over the last 5 days. In fact, the DXY was already on the rise after making two lows this year. Taking into account the inverse correlation with cryptocurrencies, the correction alert was already activated. Gold has also seen a slight rise in recent times. Its value has increased by 1.91% over the last 5 days.
BTC price history keeps hope alive
Referring to historical performance, crypto expert TechDev believes that bitcoin reflects past rallies and could be on the verge of massive gains. By the graph below, the analyst evokes the current pattern of bitcoin resembles that of last year. He goes on to say:
Last time in this cycle, BTC tried to break the ATH (all-time high) on the Weekly… It consolidated below for 3-4 weeks with Stoch’s RSI at its peak before a strong breakout at the rise.
Considering bitcoin’s performance cycles in 2013, 2017 and 2021, analyst “Allen Au” believes that the latest pullback is not the peak of the cycle, but actually corresponds to the sixth wave of the previous cycle. Suddenly, the 7th is in the process of making its appearance. He posted on Twitter:
#BTC has suffered a 15% correction since its ATH. Has the peak of the cycle been reached?
No ! Based on past cycles, BTC is in wave six and if the bottom is reached BTC could be wave seven (chart) with an uptrend soon!
TLDR:
Peak of wave 5: 69K
6th wave low: $ 58.6K? Lowest: ~ $ 53K
Peak time: December 2021
Cycle peak: ~ 190K- $ 260K
Comparison of bitcoin cycles- Source: Twitter / @ AllenAu11
No need to worry as this correction appears to be normal and does not affect the long term trend of bitcoin. Another fairly recognized expert by the name of Rekt Capital also provided an update on the latest fall of King Coin. He tweeted:
#BTC is pulling bearish into the green monthly level of ~ $ 58,700 and has now returned above the black monthly level of ~ $ 61,000.
There are still many weeks to go until the $ BTC monthly close, but generally a monthly close above either of these two levels would be bullish.
The storm will surely pass. When? Patience is the mother of safety.
1 Suppliers with your criteria
For € 1000 You get
0.0187BTC
What we like
- Easy platform for beginners
- Free trading signals
- IOS & Android application
Costs
Security
Selection of currencies
For € 1000 You get
0.0187 BTC
62.7% of retail investors lose money on CFD accounts, CFD Protection, limited risk account.
