Bitcoin price on the road to recovery after the recent dip
- Bitcoin price recently hit a new ATH at $41.9k, after which it crashed to $31k.
- The price dropped by over 25%, but fortunately, the recovery is already underway.
- The coin is now once again rushing up, potentially to a new ATH.
The price surge that Bitcoin (BTC) experienced over the last month is unlike anything ever seen before. Even the great crypto bull run of 2017 was nowhere near as massive as the rally that BTC has seen in the last month. However, the bigger the rally, the harder the fall when a correction takes place. The 25% correction that the coin saw in the last few days is proof enough of that.
Fundamental analysis: Bitcoin takes a dip
Bitcoin has grown to be bigger than ever, reaching an all-time high that dwarfed the $20k record from 2017. And, naturally, with great price came great popularity.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
Of course, Bitcoin adoption has been leading the entire crypto industry, with the coin attracting retail and institutional investors across the world. BTC is now accepted by countless merchants, banks are talking about it, major companies are talking about it, and there is even a Bitcoin Quest Contest, that gives people a chance to find crypto seeds hidden in photos.
There is no doubt that BTC was a major hit. But, then its price got rejected, and the coin crashed by over 25%, causing the news media to quickly turn headlines around. JP Morgan warned that the drop in price might have a negative impact on the Bitcoin ETF application, while the Bank of America predicted a “mother of all bubbles” for BTC.
It remains unclear what exactly caused the price to drop so suddenly. The demand for BTC has been at its peak only a few days ago, and institutions are still buying through intermediaries such as Grayscale and Microstrategy.
One explanation might be the recent movement of decade-old coins, that were not touched since 2010. At the height of BTC rise, the unknown owner of said coins suddenly moved 1,000 BTC.
But, while the price drop is not the greatest news for BTC investors, those trading altcoins have been rather pleased, as many of the other cryptos saw strong price improvements as BTC dipped.
Of course, the DeFi (decentralized finance) sector saw a drop in TVL alongside the drop in BTC price and market cap, but fortunately, both have started recovering.
While this correction has been strong, this does not appear to be the end of the rally.
Technical analysis: Bitcoin already sees another rally forming
Bitcoin price has gone full circle in the last 7 days, starting on January 5th, with a price of $31k. The coin then spent the next three days skyrocketing to $41.9k, which was followed by about two days of trading sideways, with only smaller fluctuations between $40k and $41k.
Come January 10th, the coin started crashing down, spiraling all the way back to $31k. Fortunately, the support stopped the drop, and the coin immediately bounced back up.
Some smaller resistances stood in its way, but those were relatively easily broken. On Tuesday, January 12th, the coin’s price is going up, currently sitting at $35,657 according to the exchange rate of CEX.IO. If the coin exhibits the same kind of behavior as it did during the past month, it could reach $40k again by tomorrow, possibly making a new all-time high in days to come.
I believe that Bitcoin still has plenty of room to grow. Larger corrections are only to be expected after larger surges and new ATHs. Besides, the stock-to-flow model has been extremely accurate when it comes to anticipating Bitcoin’s future price action, and it indicates that the coin could reach $50,000 by the end of Q1 (March 31st).
After that, Bitcoin could easily go even higher, potentially doubling the current ATH and hitting $80,000 by the end of Q2 (June 30th). The summer of 2021 might bring a period of trading sideways, or potentially a correction from which the coin will have to recover. But, I believe that the coin will return to $80k, and even hitting $90,000 by the end of the year.