Why Bitcoin May Face a Harsh Correction Before It Can Rally Higher
Bitcoin is currently consolidating around its local highs following the swift overnight rebound it faced.
This rebound came about following a day of turbulence, which sent BTC surging as high as $11,600 before it saw a swift rejection that led it to plunge to lows of $11,150.
This struck a blow to the cryptocurrency’s technical strength. Still, buyers were able to post an ardent defense of the lower-$11,000 region that ultimately allowed it to climb significantly higher.
That being said, another rejection at $11,700 could spark a deeper correction that sends BTC as low as $10,000 before it can continue ascending.
Bitcoin Rebounds from Daily Lows as Buyers Regain Control of Short-Term Trend
At the time of writing, Bitcoin is trading up just over 1% at its current price of $11,450. This is around the price at which it has been trading at throughout the past few hours.
Yesterday morning, news of the Fed’s decision to allow inflation to run hot for the coming months and years sent the prices of hard assets – like Bitcoin – flying higher.
BTC swiftly reached highs of $11,600 before it lost its momentum and plunged to lows of $11,150.
The visit to this level sparked a slow grind higher that eventually allowed the cryptocurrency to climb back to $11,500. From this point on, it has been trading sideways, struggling to maintain its momentum.
Here’s the Level That May Spark a Deep BTC Correction
In the near-term, analysts are watching for a Bitcoin movement to $11,700. One trader is specifically noting that a rejection at this resistance level could spark a correction that is deeper than that seen yesterday.
“No interest to short this market, but this is how I would envision a small potential correction. 1) Rejection from 11,700 2) Slow bleed and retest of 10,000 resistance as support 3) Successful retest and uptrend resumed…” he said while pointing to the below chart.
Unless Bitcoin’s momentum stalls and it consolidates here, there’s a strong likelihood that yesterday’s volatility is just the start of a new round of turbulence.