Bitcoin (BTC) took another dip early on Wednesday, taking the price down to $55,700. Is it time to seriously reconsider the bullish case for Bitcoin, or is this just another gift of a buying opportunity?
Bounce, or more downside?
It’s now 175 days of boring, grafting, seemingly inexorable sideways and downwards price action for $BTC. The latest dip took the price below the major horizontal support at $58,000, and even reached below $56,000, which is the next area of support.
The question now is whether a bounce can occur from here, or whether the price will begin to descend further, and fall all the way back down to the strong support at $51,000.
Why did Bitcoin dip again?
The U.S. stock market always has an impact on crypto, and when you see more than $1 trillion wiped off from the S&P 500 in just 24 hours, this is surely going to have a knock-on effect on Bitcoin and crypto.
The magnificent 7 U.S. stocks suffered across the board. NVIDIA (NVDA) suffered the worst - down 9.53% for the day. The Nasdaq tech stocks were hit even harder than the S&P - down more than 3%.
Taking all the bearish action in the U.S. stock market into consideration, it might seem that Bitcoin has got off relatively easily in comparison. The king of the cryptocurrencies did fall around 3%, but has since recovered part of its losses.
Bullish pattern emerging
Source: TradingView
Looking at the $BTC price on the short time frame, it can be seen that the price has fallen through the important $58,000 horizontal support level, seemingly now making this resistance. That said, this is only really an assumption on the 4-hour chart. A daily candle body holding below (or better three) would provide more confidence that this level is now resistance.
However, a chart pattern does appear to be forming that can really turn things around. An inverted head and shoulders pattern can be clearly seen. It may be that the right shoulder could still come down a bit further, but the pattern is plain to see.
Is anyone saying that Bitcoin is close to turning back around and heading northwards again? Maybe not quite yet. Whatever spooked the stock market needs to be ironed out, and it will be very interesting to see whether the S&P 500 has further to fall when it opens on Wednesday.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
