Bitcoin price slipped below the $20,000 psychological level, reaching early January levels.
On-chain metrics reveal that roughly $1 billion worth of BTC was moved at a loss before the sell-off.
The bearish outlook could see the big crypto slide as low as $17,000 in the upcoming days, especially if it shatters critical support levels.
Bitcoin price witnessed a steep correction that has knocked it below a key psychological level. The massive sell-off caused $303 million worth of liquidations in the last 24 hours as traders were caught off guard. But the long-term outlook shows that BTC is right where it should be. There is a chance for a recovery rally to originate, but investors should not hold their breath.
Bitcoin price action and where it stands
Bitcoin price shows that it has ventured into the weekly Fair Value Gap (FVG), extending from $20,386 to $17,181. FVG is an imbalance that occurs when one side of the camp takes over. In this case, there was an imbalance created by BTC buyers in early January, which led to a 21% return on a weekly candlestick.
As Bitcoin price skyrocketed, it left a gap that was untouched by the subsequent candlestick, leaving an imbalance in its wake. Typically these gaps are filled as the asset drives back into it, rebalancing the inefficiencies.
Interestingly for Bitcoin price, this FVG caused a shift in the market structure favoring the bulls, i.e., BTC set up a higher high relative to the October 31 swing high at $21,473. Such a development would suggest that the bullish outlook still persists on a high timeframe and that the current retracement is a good opportunity to accumulate.
As long as Bitcoin price remains above November 2022 swing lows at $15,462, the weekly chart will show a bullish structure. With that in mind, an accumulation between $20,000 and $18,800 seems to be the best way to go.
However, investors also need to keep a close eye on the weekly Relative Strength Index (RSI), which has slipped below the midpoint after the recent sell-off. If bulls are in control, the weekly RSI should climb back above the 50 level and hold.