Bitcoin sold off viciously last week, dropping about $20K and posting its first $10,000 daily candle as it dropped from $50K to ~$43K, then the following day to $30K. This is an extremely bearish candle obviously, as this indicates the end of a trend, though the question becomes: Is this the infamous "first sell off" in a market cycle?
(May 24, 2021 8:30PM EST)
Short-Term
Bitcoin capitulated late last week after taking a 50% haircut from the current ATH around $65K, giving us a long wick and a couple tests of the lows before recovering back to $40K. Bitcoin has now had a big leg up, and now a big leg down. So what's next? A big leg sideways. We'll probably trade sideways between $35K - $45K over the next couple months as we rebuild a base to set us up for the next macro leg higher, which looks to be end of summer/early Fall.
Bitcoin Dominance has also recovered a bit amid last week's selloff. Market-wide drops like this tend to suck the life out of altcoins, sending capital to "safer," larger-cap assets like Bitcoin. This makes sense as Bitcoin tends to be a market-mover and often precedes all other cryptos in bull market rallies.
Where are we in this bull market cycle?
With many calls that "the bull market is over" and "the top is in," sentiment appears to have reverted from extreme greed to fear in less than a week. Meanwhile, fundamentals are stronger than ever and nearly all indicators point to a six-figure Bitcoin price by EOY. In my estimation, we're at the "First sell off/Bear Trap" stage. This puts us up significantly from the bear market lows and even the previous ATH at $20K, but at a healthy discount form the current highs. What typically follows is a "boring" consolidation phase in which momentum rebuilds and confidence returns to the market over time.
Looking ahead, assuming the macro uptrend holds and demand continues to remain constant/grow, we're only a matter of weeks away from a new ATH, and only a few months away from $100K+ BTC.
Long-Term
BTFD. Fundamentals have not changed. Daily and even weekly charts will show relatively large corrections; this is standard bull market behavior. Now that another altseason has been spectacularly squashed, this sets us up for another Bitcoin leg up to new highs, likely $75K+ and higher. By nearly every measure, we are nowhere near a top; in fact, we are maybe halfway through this bull market. What do you do during bull markets? Buy. The. Dip.
Support: $35K, then 30K.
Resistance: $40K, then $45K, then $50K.
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