The dominant cryptocurrency’s price has fluctuated in recent months and finally hit an all-time high – $24,200. Bitcoin witnessed a correction on December 21, as the equity markets also opened in the red. The world’s largest cryptocurrency declined by 6% on December 21. Meanwhile, the dollar index strongly recovered.
Such declines and uncertainty appear to be due to the reported emergence of a mutated COVID-19 strain in the United Kingdom. The mutated virus prompted the government to tighten restrictions, which could significantly impact the markets.
If we look through the 4-hour chart of BTC, a bearish divergence determines the breakdown from $24,000 to Monday’s lows of $22,000.
Significantly, this is still considerably higher than Bitcoin’s price three months ago. At the same time, such corrections are widespread in both bull and bear markets.
If Bitcoin rejects at $23,400 to $23,600, more downside is on the table. The higher time frame levels will be tested as support. However, if this $23,400–$23,600 region breaks to the upside, we expect a new lifetime high before the end of 2020.
Significantly, the only level to watch for the dominant cryptocurrency at this point is the area nearby $18,500. This weekly level has many confluences around the past lifetime high and is the last region of consolidation.
Notably, on the daily time frame, the recent higher low is at $17,500. It means that BTC’s price must remain above this level on the daily time frame to stay bullish.
If the total market cap hits $550 billion, It will put BTC in the $18,500 area
Additionally, it is essential to note that a fall toward $12,000 would still give a bullish outlook to the chart. However, this kind of correction would be nearly greater than any standard 20% to 40% bull market correction. However, a sharp 50% decline would not necessarily break the bull market cycle and present a great buy the dip opportunity.
Furthermore, the total market cap of cryptocurrencies has been rejected at the all-time high area, which indicates that a correction is likely to happen.
Usually, the total market capitalization chart exhibits a better view of the market’s state than BTC. Therefore, an increase to $550 billion would put Bitcoin in the $18,500 area. Furthermore, the crucial short-term support zone that must be maintained to avoid any more downside.
Furthermore, altcoins may benefit at the beginning of 2021 if Bitcoin’s price can sustain above $18,500 and start consolidating from there. Until then, COVID-19 fears and doubt will likely continue to hamper the markets.