In the wake of the launch of U.S. exchange-traded funds (ETFs) for Bitcoin on January 11, the leading cryptocurrency has displayed a slowdown in its decline. Currently facing a pivotal juncture, Bitcoin is undergoing scrutiny as a potential bottoming signal emerges on its charts.
On Wednesday, Bitcoin witnessed a notable uptick, surging over 4% to reach a peak of $40,527, subsequently settling at $40,091 at the time of reporting.
Glassnode’s co-founder, known as “Negentropic,” raises the question of whether Bitcoin has recently bottomed out in a “descending wedge with a classical throw-over,” following its rebound from the January 23 lows of $38,501. If this analysis holds, there is optimism for a rally towards $42,000 before a retest of $40,500, with the co-founder affirming that the “bigger picture still remains very bullish” for Bitcoin.
The cryptocurrency markets experienced heightened speculation in anticipation of Bitcoin ETF approvals, culminating in a sell-the-news event post-launch. Bitcoin, having retreated over 20% from the intraday high of $49,021 upon the ETFs’ introduction, has witnessed a shift in sentiment from excitement to concerns regarding the actual demand for these products.
Glassnode’s assessment notes a level of resilience in Bitcoin, citing that the current drawdown of -20.1% is comparatively mild when measured against historical corrections in bull markets. This recent sell-off marks the fourth instance in the past year where Bitcoin has experienced a roughly 20% loss.
Applying Elliott’s wave theory, which posits the recurrence of wave patterns in markets, analysts anticipate Bitcoin to establish a base between $36,000 and $38,000 before a potential fifth wave reignites the ascent observed in the previous year.
Cryptocurrency analyst Ali emphasizes historical patterns, suggesting that in bull markets, declines in Bitcoin prices are consistently followed by subsequent upward movements. This implies that downturns could present strategic buying opportunities for investors looking to capitalize on the potential resurgence of Bitcoin’s value.
