One of the saddest days in the entire history of Bitcoin is considered to be the cryptocurrency crash in March last year. Then, in a matter of hours, the BTC rate dropped from 8 thousand dollars to 4 thousand.
Along with this, altcoins also collapsed, and the same ETH briefly dropped below $ 100. In April 2021, something similar was repeated in the cryptocurrency market – at least judging by the readings of technical indicators, BTC experienced one of the largest corrections. This was announced by investment strategist Raul Paul on his Twitter. Let’s talk about the situation in more detail.
Note that corrections were much more severe at one time. In particular, in 2011, Bitcoin fell from 1 dollar to 1 cent within a few seconds, that is, it fell a hundred times.
Bitcoin and cryptocurrencies in general are now more mature technology. In this regard, the collapse of the exchange rate does not happen dozens of times, although BTC is also able to decrease in value. And the last drawdown of the first coin became very painful for traders.
Bitcoin comes out of correction
Paul’s main argument is the drop in the RSI indicator on the 1-day chart of Bitcoin, comparable in scale to the serious cryptocurrency corrections in early 2017. It was then that BTC rolled back to the levels from which the explosive phase of the previous bullish trend began.
Recall that the relative strength index (RSI) is an indicator that determines the strength of the current trend of an asset with the likelihood of its change. That is, the stronger its change, the more reasons for investors to invest in cryptocurrency, doing it on a large scale.
And it’s easy to understand them: experienced traders do not want to buy coins at a relatively high price or at its historical maximum, so they are waiting for the opportunity to buy an asset at a cheaper price. And when it occurs, investors begin to massively transfer money into promising coins in their opinion, which forces the market to renew new historical highs.
As we have already noted, this happened at the beginning of 2017. Many analysts consider this period of time to be the beginning of a sharp rise in the market.
Here is a quote from an expert in which he shared his research findings. The replica is given by Cointelegraph.
Corrections in a bull market are opportunities, not threats to investor capital.
Paul also noted that Bitcoin’s oversold level was comparable to that of the cryptocurrency in March 2020 during a massive market crash.
That is, the expert believes that it was after the recent collapse that traders were provided with one of these opportunities to buy BTC at a “bargain price”. A recent report from analysts on the Glassnode platform also noted a serious depth of the collapse: the number of Bitcoin addresses that are currently holding the coin at a loss reached a nine-month high of about 6.4 million units. That is, they most likely have no doubts about the growth prospects of the first cryptocurrency and expect to reach zero in the near future. At the same time, 86 percent of all addresses can now sell BTC for a plus.
The market seems to “agree” with Paul’s assertion that Bitcoin should rebound to the nearest significant resistance level. Over the past day alone, the main cryptocurrency has risen in price by at least 11.5 percent after falling to a local minimum in the region of 47 thousand dollars earlier Monday.
We checked the actual data: today Bitcoin is trading at $ 54,746, which is well above its local low last week. Ethereum, Binance Coin BNB and the native token of the Uniswap decentralized exchange under the ticker UNI look the best in the top ten cryptocurrencies. Their growth for the week was 17.6, 13.1 and 24.9 percent, respectively.
The significant growth of UNI is most likely caused by the expectations of traders for the release of a new version of the Uniswap decentralized exchange, which will take place on May 5, 2021. Many improvements await the platform, as well as a release on so-called second-level solutions – they will make transactions much cheaper and faster.
It is possible that Bitcoin has not yet gained enough interest from buyers, which is enough to break through the historical maximum of the cryptocurrency rate. The latter is set at $ 64,804 on April 14, 2021. In this regard, traders should still use stop losses to suppress losses and other components of risk management. Well, long-term holders still have nothing to worry about.