Bitcoin Drops Below $11,500: Is The Short-Term Crypto Market Uptrend Over?
Bitcoin price just broke below $11,500 briefly, dragging the rest of the crypto market down with it.
Since last evening’s daily candle close, the crypto market has lost over $8 billion in value. Is this the start of a greater market correction, or is this yet another opportunity to buy the dip?
Bitcoin Falls Below $11,500, Prompting Widespread Crypto Market Profit Taking
Since the start of 2020 to the yearly high, the total crypto market cap grew by over 100%.
Bitcoin’s year-to-date returns aren’t far behind at over 60%. The leading cryptocurrency by market cap is still trading more than triple the Black Thursday low set at $3,800.
After that day, the crypto market and greater financial space have been on a strong uptrend on the back of stimulus money and a mad dash away from cash.
Inflation fears have prompted investors to look toward hard assets such as Bitcoin and other cryptocurrencies.
Other top crypto assets, such as Ethereum, have performed far better than even Bitcoin throughout the year.
But all this could soon come crashing back down, starting with the recent fall.
Total CryptoCap Daily Average Directional Index & Resistance Zones | TradingView
Is The Recent Cryptocurrency Uptrend Coming To An End?
According to the Average Directional Index on the total crypto market cap chart, the recent uptrend has come to an end, and the indicator is beginning to turn downward.
A dip to a reading below 20 indicates that the short-term trend has fully fizzled out, and a new one could soon emerge.
However, the same indicator on higher timeframes suggests that the longer-term uptrend remains intact and is only gaining ground.
This may imply that any corrections, no matter how severe in scope, should be an ideal opportunity to stock up on cheaper crypto assets.
Related Reading | Analyst: The “Real” Altcoin Party Begins In Early 2021
Bitcoin charts show a similar story, with the ADX showing an even weaker trend. Altcoins have recently outperformed Bitcoin by a wide margin, so it is not surprising to see the total market cap more bullish than the first-ever cryptocurrency itself.
BTCUSD Daily Average Directional Index & Resistance Zones | TradingView
Bitcoin’s big breakout above $10,000 was driven in part by a boost from DeFi coins, a declining dollar, and renewed interest in the face of coming inflation.
Analysts argue that the next crypto bull run is now upon us, and assets like Bitcoin, Ethereum, and others will be headed toward an extended uptrend and much higher valuations in the months and years ahead.
Much of crypto analysis is predicated on Bitcoin’s four-year-cycle theory. If the asset follows a similar trajectory, it could reach as high as $325,000 per BTC by the end of 2021.
What exactly this means for the rest of the crypto market is anyone’s guess. But with how bullish altcoins have been, the days of complete and utter Bitcoin dominance appear to be in the past.
Is the crypto market heading towards another bull run, and this is just another healthy and needed correction along the way to new highs? Or is this a major rejection back into the troughs of the bear market?