Bitcoin is correcting after a big announcement from Michael Saylor and facing crucial resistance at $51,000.
Bitcoin (BTC) is currently facing a crucial resistance to breakthrough after a massive rally of 70% since the recent low in July at $28,000. This resistance is found in the psychological area between $50,000 and $51,000 and can be classified as the final hurdle before a new all-time high.
This correction started when Michael Saylor revealed that MicroStrategy had purchased another $177 million worth of Bitcoin, while the company is already one of the largest holders of Bitcoins.
The market hasn’t seen any correction since the recent bottom at $28,000, through which a potential correction might be on the horizon.
Bitcoin facing crucial resistance to breaking through at $51,000
The daily chart of Bitcoin shows an apparent resistance is coming up. The $51,000 level is crucial for the markets to break through, as that level was the significant S/R flip before the heavy crash occurred in May.
If the markets cannot pass this level, a correction for the entire market is likely to happen. That’s not unexpected, however, as the altcoin market is showing signs of overheating.
Alongside that, the chart shows a potential bearish divergence could be opening up, which often precedes a correction.
Given the significance of the $51,000 level, this area is the final hurdle before a big run toward the all-time high is likely to take place. If the $51,000 resistance breaks, a short squeeze to $57,000–$59,000 becomes likely. However, given the recent correction, a further corrective move is most likely going to happen.
The crucial level to watch for a potential breakdown is the entire region around $44,000. That level marked a new higher low in the current structure and is the most likely level to support the markets if a further and broader correction occurs.
Aside from the $44,000 level, the next level of support can be found around the $40,500 area, as that’s the previous high. Overall, the market shouldn’t be dropping beneath $37,500, as that’s the final breaker before new lows are on the table. For now, a rejection at the $51,000 resistance level may open the gates for more do.
Total crypto market cap faces an important level
The total crypto market capitalization has been on a huge run since the recent low at $1.2 trillion. Since then, the market has been surging by more than 70% to a high of $2.1 trillion.
This recent high at $2.1 trillion is the final resistance before the market can see a breakout to the upside. Next to that, a potential bearish divergence is also starting to emerge on the chart as well, calling for a possible short-term reversal to happen.
Based on the current chart, the following levels of support are found at the zone around $1.75 trillion, as that’s the recent compression area. Moreover, it’s also a recent high.
Such a high could mark a potential new range to be established. If the level around $1.75 trillion doesn’t sustain support, a further correction toward $1.55 trillion would still not be out of the books.
However, this entire correction will be invalidated with an apparent breakthrough above $2.1 trillion. If such a breakthrough happens, the chances of the markets continuing to new all-time highs above $2.5 trillion are likely to occur.
Crucial support at $48,000 for Bitcoin on lower timeframes
The two-hour chart for Bitcoin shows a crucial level to sustain for the market to continue its upward trajectory. If the area at $48,000 doesn’t grant support, Bitcoin’s price will fall back into its previous range.
That previous range had ample support at the $44,000 area, and that’s most likely going to generate the next area of support for this entire correction. Nothing is for sure, but the moment Bitcoin loses $48,000, a cascade of stop/loss triggers could happen, which may result in a potential drop toward $44,000.
This could, of course, hurt the altcoin market. However, traders and investors should understand that the market goes up in waves. In uptrend cycles, especially the big ones we’ve seen recently, corrections are to be expected before a new impulse move can happen.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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