Bitcoin is currently experiencing a slight decline of more than one percent and is trading just above the $98k mark. After reaching an all-time high of $98,655, the cryptocurrency underwent a reversal and even dropped below the $96k mark.
However, Crypto World analyst Josh has pointed out that the weekly Bitcoin chart displays strong momentum, with the MACD indicating a bullish trend. The Super Trend indicator on the 4-day chart is also showing a green signal, suggesting that the bullish trend is likely to continue. While short-term pullbacks are common, the overall long-term outlook remains optimistic.
Short-Term Price Action: Pullbacks & Support Levels
Despite the positive outlook, BTC is currently undergoing a short-term pullback. The price of Bitcoin is showing signs of losing momentum, especially around the crucial $100,000 level, which serves as a psychological barrier. Pullbacks are anticipated around the $94,000 to $95,000 range, with additional support at $89,000 if the price drops further.
Bearish Divergence: Historical Parallels
Bitcoin is currently exhibiting a short-term bearish divergence, reminiscent of the price movement observed in 2020 before a significant breakthrough above $20,000. Just as the price struggled to surpass that psychological threshold, the price may witness a temporary dip below $100,000 before eventually surpassing it. The current scenario mirrors a similar pattern with a higher price and lower RSI, indicating a loss of short-term momentum.
Bitcoin’s Pullbacks: Historical Context
It is crucial to acknowledge that Bitcoin’s pullbacks, even during a bullish phase, are typically manageable. The current 3-4% decline from recent highs is relatively minor compared to previous corrections, such as the 16-17% pullback in 2020.
Liquidity and Short Squeeze Potential
Presently, there is an accumulation of liquidity above the $100,000 level, which could potentially trigger a short squeeze if Bitcoin surpasses that level. This would compel numerous short positions to liquidate, propelling the price even higher. While downside liquidity is somewhat limited, we still have support levels around $94,000 and $91,000.