Traders say Bitcoin price ‘needed pullback’ to maintain bullish momentum

by crypto journalist

Bitcoin’s parabolic increase well above its previous all-time-high has many experiencing déjà vu from 2017 and a number of analysts are concerned the market is overdue for a sizable correction. 

On Jan. 8 With Bitcoin (BTC) price reached a new all-time high at $41,940 and this week’s 28% collapse to $31,076 had professional and retail investors afraid that a strong trend reversal was in the making.

Bitcoin’s historical data shows that rapid parabolic ascents are usually followed by equally catastrophic corrections like the one seen after the 2017 bull run. Because of this, the current market’s similarities to the euphoric mania of 2017 to 2018 bull run have not gone unnoticed.

Cane Island global macro investment manager Timothy Peterson recently pointed out that:

In a follow-up private conversation with Cointelegraph Peterson noted that there remains a short term bull case for Bitcoin stating:

Popped bubble or lower support retest?

There are some telltale signs that Bitcoin’s quick gains reflect a manic market on the verge of a correciton and the current bull versus bear debate centers around whether this week’s volatility is a healthy pullback to test lower supports before the price initiates the next move higher.

LookIntoBitcoin founder and Decentrader analyst Philip Swift recently made the case that Bitcoin’s recenet price action reflected a “needed pullback/slowdown” and he noted that several indicators were flashing red, indicating that the rate of BTC’s price appreciation was reaching extremes.

Swift said:

Swift’s analysis indicates that BTC is likely to trade sideways and slowly ascend in the near term but at a slower rate “as some money/profit rotates into altcoins.” Recent price moves in altcoins, especially DeFi-related tokens indicate that this rotation might already be underway.

BTC bulls aren’t done yet

While analysts and chart watchers are calling for Bitcoin to take a breather, bullish traders may have indicated that they have different plans. At multiple instances this week, bulls defended retest of lower support by buying into each dip and there is also the expectation that institutional inflow into BTC will resume now that Grayscale has re-opened its GBTC family of products.

A look at the 30-day average daily sentiment score for Bitcoin shows that despite the pullback, the average score has only decreased slightly from recent highs and is well above the lows seen during previous downcycles.

While few know the exact course Bitcoin’s price action will take this weekend, the strengthening fundamentals from a technical perspective, increased institutional inflow and positive announcements by government regulators suggest that the recent dips were nothing more than healthy corrections that were bound to occur before Bitcoin gears up to reach for a new all-time high.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

This content was originally published here.

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