The ongoing cryptocurrency market correction has reentered the zone of “extreme fear.” BTC was at its lowest since 7 September, when it crashed by over $10K in 24 hours. In fact, 26 November was particularly tumultuous for the entire market, with the bears clearly having the upper hand.
That said, despite the bearish momentum, the long-term narrative still looked bullish for Bitcoin. However, the question remains- is there a reason to worry about Bitcoin in the near term when the long-term predictions look healthy?
Popular crypto strategist and trader Michaël van de Poppe explained his perspective in a YouTube video, to address this scenario. He said the largest crypto token is going through a combination of concerns about more lockdowns as well as a cyclical correction. Ergo, it is trading in the red zone.
Well, other asset classes have been witnessing a similar fate. Equity markets in Europe and the U.S. also opened in the red.
What caused this grand detour?
Well, not so surprisingly, certain fears initiated from potential coronavirus lockdowns. Although, the actual impact of a potential lockdown was not visible yet, as per the Dutch trader. For now, a “natural and healthy corrective move was visible” here.
This above chart showcases the equity market following a similar setback to Bitcoin. In this context, Poppe added,
“So finally we’re getting it, and when the dollar is showing strength, it would make sense that the equities are going to have some pain too. Bitcoin has been seeing this correction already. Equities are following suit in the past week now too.”
The analyst went on to assess Bitcoin’s latest price dip at press time. He gave his narrative behind the flagship token’s bloodbath.
“I believe the reason why Bitcoin is dropping right now is because of the macroeconomics taking place. But regardless of that, I’m still very sure that the markets are not going to have a bear market at this stage.”
According to him, “lengthening of the cycle” was most likely, even though the larger market is still holding out hope for things to proceed in a bullish manner. He also noted that this was a “healthy correction.” Now, the next big question is – where is Bitcoin going to bottom out?
Well, this poses a strict challenge here to predict BTC’s next moves, as neither the four-year cycles, nor PlanB’s stock-to-flow model was valid anymore. “We are in a different environment when it comes to the markets right now,” Poppe opined.
Moving on BTC specific price analysis. As per the chart below, he believed that $55,000 will act as a crucial mark. However, a further correction remains a possibility. Poppe also noted that the king crypto could fall as low as $48,000 – without signifying an end to the bull run.
He further explained,
“When we’re looking at Bitcoin against [the U.S. dollar], at this point we still have a very important support level [approximately $55,000] that we are acting on right now. The crucial thing when it comes to the daily time frame is that we are flipping this level with $66,000 as resistance and started to crack south.”
Additionally, he also mentioned what, according to him was the crucial level,
“When we’re looking at levels that we should be watching, [$55,000 to $55,600] is the first real level that you should be looking out for. However, the crucial level to me is still this level around $48,000. Even if we get in that region, I still believe that we’re bullish in markets and we’re just having a very natural corrective move before we’re going to accelerate again in 2022.”
Overall, despite some more pain across markets, Bitcoin could recover soon. Consider this, at the time of writing, Bitcoin represents an 88% return on investment, since the beginning of the year when it was trading at $29,286. Meanwhile, some are also of the opinion that the current correction would benefit Bitcoin’s journey going into 2022.