(Kitco News) – Long-time Bitcoin (BTC) traders breathed a sigh of relief on Thursday as the correction that many analysts had been calling for finally came, though King Crypto made one final surge to a new all-time high before the fall.
Bitcoin has been rising non-stop since February 26, and past bull runs show that rapid rises are often followed by even faster descents, so this break in BTC’s “up only” trend in 2024 is a welcome sight.
Stocks also fell under pressure after data was released showing that February’s Producer Price Index rose 0.6% from last month, which was higher than an expected increase of 0.3%. This is the latest inflation reading to come in hotter-than-expected, suggesting that prices are once again on the rise and the Federal Reserve has more work to do if it wants to bring inflation down to its 2% target.
While investors had resigned themselves to expecting a rate cut in June, they are now reevaluating whether the first cut may not come until even later in the year amid ‘sticky’ inflation readings. At the closing bell, the S&P, Dow, and Nasdaq were all in the red, down 0.29%, 0.35%, and 0.30%, respectively.
Data provided by TradingView shows that after hitting new ATH near $73,840 in the early hours on Thursday, Bitcoin bears took control of the price action and smashed it back below $69,000, which equates to a 7% intraday reversal.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $70,500, a decrease of 3.7% on the 24-hour chart.
Volatility is to be expected
In market analyst Bloodgood’s latest update, which was released on Wednesday, prior to Thursday’s pullback, he noted that following the new ATH, “traders want to see the breakout above ATH sticking” before increasing their exposure.
“If you take a look at the daily chart you can see a clean breakout and a clean retest of the ATH level with continuation,” he noted. “Still, be careful as volatility is high and the BTC halving is in 35 days. There is a time when it's smart to be aggressive and there is a time to be patient with the leverage slider.”
“In any case, if you’re impatient and looking to enter, I highly suggest placing a stop loss below the previous ATH as there is a chance for a bigger retrace and open interest flush there,” he warned.
Following Thursday’s pullback, which indeed dipped below Bitcoin’s 2021 high, Bloodgood predicted that BTC would see a strong bounce, but warned that further weakness could see it slide down to the $63,000 region.
$BTC should bounce right here.
I'll max bid the strong bounce too.
If rejected, then we can say hello to 63k level again.
(Which would be pretty normal and healthy) pic.twitter.com/HICSFVQbJF— Bloodgood (@bloodgoodBTC) March 14, 2024
MN Trading founder Michaël van de Poppe also warned about the potential for a pullback as Bitcoin tapped a new high in the early hours on Thursday and provided a chart highlighting the regions to keep an eye on for re-entry.
Pure technical framework for #Bitcoin.
- Lower volume on the rally.
- Bearish divergence applied.
Nothing is confirmed, yet, but after this extremely positive run, it's potentially likely that we're going to have a correction.
That would be golden for #Altcoins. pic.twitter.com/cnP4a0g8DW— Michaël van de Poppe (@CryptoMichNL) March 14, 2024
Despite the pullback, Poppe remains bullish on the future outlook for Bitcoin and crypto in general.
“It's incredible how fast the adoption is accelerating,” he tweeted. “The Spot #Bitcoin ETFs have proven that Bitcoin isn't going away and is a legitimate asset, with a significant use case of 'Hard Money.’ I think that the inflow will only increase over the coming years. #Bitcoin to $500K.”
And CFA Rajat Soni helped put the long-term outlook for Bitcoin into perspective for non-holders, tweeting, “The worst-case scenario for most people is #Bitcoin going to $100K, then $250K, then $500K, then $1M+.”
“There is so much money on the sidelines ‘waiting for a dip’ that we can't even get below $68.5k,” he said. “You need to understand that MOST PEOPLE HAVE NO ALLOCATION. This is game theory playing out - everyone is trying to predict everyone else's next move... and retail investors will be the ones who make the worst decisions here.”
“STOP WAITING TO BUY IF YOU HAVE CASH SET ASIDE,” he stressed. “You will be able to buy less Bitcoin each week/month/year for a very long time.”
Altcoins hit hard by Bitcoin’s pullback
Bitcoin’s pullback magnified the losses for altcoins as traders are often quick to dump tokens at any sign of weakness with the hopes of buying them back later at a lower price. Thursday’s price action saw all but two dozen coins in the 200 record losses, with 14 tokens seeing double-digit declines.
Daily cryptocurrency market performance. Source: Coin360
0x Protocol (ZRX) was the biggest trend-bucker, increasing 29.2% to trade at $1.31, followed by a gain of 25.8% for Livepeer (LPT), and an increase of 19.9% for Loopring (LRC). WEMIX (WEMIX) was the biggest loser with a decline of 16.3%, while Toncoin (TON) and ssv.network (SSV) fell 13.5%.
The overall cryptocurrency market cap now stands at $2.64 trillion, and Bitcoin’s dominance rate is 51.8%.
