Investor’s Guide to Navigating Bitcoin Price Volatility Through Multiple Scenarios

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  • Bitcoin price is showing tight consolidation after the recent crash of 17% to $21,283.
  • A breakdown of the $20,750 support level could result in a 15% sell-off to a low of $17,578.
  • However, a sweep of $20,750 followed by a quick rally could result in a 12% bounce to $23,175.

bitcoin price seems to have slipped back into consolidation after the recent market sell-off. This development increases uncertainty, leaving investors wondering if they should start buying the dip or cut their investments.

Bitcoin price in suspended state

bitcoin price faced massive selling pressure at $24,664, the midpoint of the $17,578-$31,749 range. After several rejections here, BTC fell nearly 20% and retested $20,750 for the third time in the past month.

A break in the ongoing consolidation could go in two directions:

  1. A sweep of the $20,750 level followed by a quick rally.
  2. A breakdown of $20,750, leading to a crash that could revisit the June 19th low at $17,578.

Investors can assume the first scenario plays out, given the upcoming Merge update for the Ethereum blockchain on September 15. The Merge-led rally seems to have blown a lot of altcoins like its bull run.

As the scheduled date approaches, capital could most likely shift from BTC to ETH and other altcoins. This could lead to an aimless consolidation in Bitcoin price around $20,750. However, if the capital is split between BTC and ETH, a quick sweep followed by a rally seems like a plausible outcome.

The rebound could see Bitcoin price revisit the midpoint resistance level at $22,500. If the buyers continue to keep the pressure on, an extension of this rally to $23,175 looks likely and on the cards.

BTC/USDT 4 hour chart

Alternative scenario and its ramifications

However, if bitcoin price ignores upcoming meltdown and turns the $20,750 support level into a resistance barrier, it will confirm a bearish resurgence. In such a case, let’s look at the chart of the highest period.

BTC’s daily outlook shows that it has been consolidating and crashing since the start of 2022. The recent crash pushed the point of control (POC) to $21,177, which is the highest traded volume level since June 10.

A breakdown of this level could result in a 10% decline to around $19,000 Even in this bearish outlook, this level is the last point of support for bitcoin price.

Although unlikely to happen in the next few weeks, an outage of the aforementioned support area lead to a catastrophic crash at these support levels – $15,500, $13,500 and $11,900.

BTC/USD 1-day chart

BTC/USD 1-day chart

Although these scenarios explained above are slightly bearish to extremely bearish, take a look at the bullish outlook for BTC. This narrative will emerge if Bitcoin price recovers from its current position at $21,327 and turn the $25,000 hurdle into a support floor. Such a step will invalidate beraish theses.

This will indicate that the bulls are back and the The 45% crash of the first half of June is ready to be canceled. In such a case, BTC needs to clear previous highs at $32,384 and create a new one.

This development will be the first confirmation of a bullish rally. In such a case, market participants should be on the lookout for a lower low from the most recent low around $20,750. If successfulthis move will be the one to buy and expect BTC to take off towards further resistance levels – $35,000, $45,000 and so on.

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