FX.co ★ Bitcoin survives biggest sell-off since 2020 and recovers above $35k: will BTC correction continue?

The total panic in the cryptocurrency market is gradually replaced by moderate optimism, and most digital coins begin an upward movement. All this was impossible without a rebound of the main cryptocurrency. Bitcoin experienced one of the biggest sell-offs in its history and was close to the start of a bear market. But as we expected, the cryptocurrency made a powerful rebound from the $33k-$34k area on the back of market activation. The price movement gave rise to rumors about a wide trend reversal and a new move to the highs, but this is not entirely true.

Over the past day, Bitcoin has risen in price by 3.5% and continues to recover following the stock markets. According to Bloomberg, the correlation of the main cryptocurrency and stock indices has reached another record. Therefore, when analyzing bitcoin, you should pay attention to the classic market. At the same time, Bitcoin had its own reasons for the fall. Glassnode experts claim that Bitcoin experienced the second largest sell-off since the bear market.

However, the worst is behind us as the asset made a strong recovery momentum to $37.5k. Santiment analysts believe that investors in unison staged the biggest "buy the dip" flash mob of the month. The result of the bulk buying was the breakdown of the $35k line and movement to the first significant resistance zone at $38k.

Let's forget about the Fed's possible impact on the price movement for a moment, as I believe that yesterday's upward momentum was also triggered by optimism regarding the Fed's positions. In addition, Jerome Powell himself is cautious in his statements, and therefore, most likely, something out of the ordinary will not happen.

Now, let's discuss the possible complexities. Bitcoin is quite capable of breaking through the $38k resistance level, where the zone of stops and sell orders begins. However, at the current stage, the bulls do not have enough volume to pass the $39k-$40k zone. This range was an important support zone and is now considered a dangerous resistance level. In addition, this is a psychological mark, where the maximum number of shorts will be concentrated. The downward trend level of November 10 also passes here and the 0.236 Fibo level looms nearby. The combination of these factors makes a permanent breakdown of the $40k mark unlikely.

I suppose that in the near future we will have a local period of bitcoin consolidation, during which the altcoin market will recover to local highs. However, it is still dangerous to go long as the move to $39k-$40k will be impulsive. The asset will not be able to break through this zone on the first try, and, most likely, it will touch it with a long upper wick. After that, we are waiting for a downward movement and a re-collection of liquidity from the $32k-$35k and $35k-$40k range.

It is quite expected that the bitcoin will drop below $30k, but in the current conditions, the price is unlikely to fall below the previous low at $28.7k. As I expected, bitcoin follows the scenario of April-June 2021. The correction will end around the 55% price drop from ATH. February will be a full-fledged beginning of the upward movement of bitcoin to new highs.