Since the capitulation on Wednesday, The Bitcoin price has been on snooze-control. Bruised traders may welcome the quiet but its unlikely to last.
After the last couple of weeks, worn-out cryptocurrency traders must have needed the peace of the last two days. BTC/USD has been fluctuating on either side of $38,000 for the last 24 hours and is currently $37,500.
However, I’m not entirely convinced that the Bitcoin price will remain calm for too long.
We all know what happened on Wednesday. BTC/USD was sold aggressively, down to $30,000, before staging a late-day rally to finish -15% lower at $36,750.
The one-day performance in isolation wasn’t a complete disaster. However, the Bitcoin price had been trading close to $65,000 a month earlier.
Crypto traders have been conditioned to buy the dip and HODL (Hold on for dear life) during previous corrections. And those that have managed to stay in the game have been rewarded with exceptional performance over time.
Investors who arrived late to the party, especially those using leverage, likely suffered nasty losses last week. The forced liquidations would have added to the velocity of the sell-off.
These investors may not return to the market for some time, possibly never. This could be a good thing for the price. If the weak longs have already sold, it leaves less supply on the way up.
The weaker hands would have passed their positions to stronger hands which are much more equipped to absorb future volatility.
However, a reduction in retail buyers might mean it could be some time before the Bitcoin price enjoys another parabolic run higher
Bitcoin Price Outlook
From the 15-minute price chart, we can see that the bounce from the $30,000 low on the 18th failed at $43,000. The price then dipped to $35,000 before three further attempts to break higher.
Each subsequent rally failed to get as high as the last. This has now formed a descending trend line at $40,900.
Following the failed attempts to go higher, the Bitcoin price broke back below $40,000, trading down to $35,200. This now creates an ascending line from the $30,000 low at $36,400.
The price, for the moment, remains pinned in this narrowing range, but narrowing ranges typically lead to a break-out.
A break of the upper end of the channel could see the price extend to the April 17th High at $45,000. Whilst a break of the lower end would put the $30,000 level back in the frame.
I remain optimistic about Bitcoins’ long-term prospects. Nonetheless, if the market breaks the support, the Bitcoin price may get cheaper first.