Bitcoin’s price has increased dramatically in the last year. Although the bull market started towards the end of 2020, significant gains were seen in the first quarter of 2021. As comparison to the coin’s previous price experience, Q1 of 2021 was a very notable time frame in terms of the returns BTC was able to generate.
On the 19th of February, Bitcoin broke through the $55,000 resistance level for the first time. This was followed by a market break into the $60k mark. However, after the breach on February 19th, and amid the overwhelming bullish outlook for the currency, Bitcoin has been a target of the push and pull syndrome – a mechanism in which an asset experiences consecutive cycles of minor price corrections.
While the overall outlook for Bitcoin is bullish and it may well be on its way to hit $80k in the coming months and even $100k before the close of the year, what signal is it giving traders who are more interested in short-term trades?
Interestingly, data provided by Santiment shows that the market sentiment has changed drastically for the king coin and the market’s largest altcoin – Ethereum. The aforementioned data highlighted that the weighted sentiment for both assets fell to the extremely negative territory after BTC retraced and fell back under $60k and ETH flipped the $2k support back into a resistance level over the week.
However, does this also imply that there is a bright side for traders in their bid to accumulate more of each of these two coins? In the past, as per the data, during times of such “negative” sentiments, accumulation has continued and has fueled a trend reversal, one enabling the price to surge. The FUD in such market circumstances for Bitcoin invariably proves to be a good buying opportunity, as demonstrated by previous phases wherein the coin has been subject to price corrections.
Furthermore, it is easy to see that there has been a price correction in the short term. According to Glassnode data, BTC flowing into exchanges recently reached a one-month peak. This is usually a result of short-term hodlers shifting their hodling habits. When the price rises, many traders take advantage of the short-term profits, which may be one of the reasons Bitcoin has failed to break through the $60k barrier for so long without having a turnaround.
However, this has been valid for even the range up to $40k, and it could only be a matter of time before the present resistance caves in as well.
These small corrections are the only “low points” that could validate the “buy low, sell high” slogan for new entrants joining the current BTC market. If the price is expected to rise in the coming months, as it has in the previous three months, price corrections are likely to be lower in margins.
Despite market corrections, the largest fall in the last week have been less than 7%. When the bull run enters its next step, these corrections can become more frequent, but they may also become smaller. As a result, recent market corrections do not actually indicate the conclusion of the bull run, but rather a comparatively decent entry point and a buying opportunity.
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