In a shocking turn of events, the cryptocurrency market experienced a massive selloff today, wiping out nearly $200 billion in value. The driving force behind this sudden plunge was the rumor of impending Bitcoin ETF denials by the SEC. As Bitcoin prices started to plummet around 6AM, altcoins followed suit, experiencing drops of 20 to 30% from their recent highs. This drastic downturn has undoubtedly left many investors feeling uncertain and anxious.
In times of doubt, it is often advised to take a step back and assess the bigger picture. While the daily chart may display a grim wick, exploring higher timeframes, such as the monthly view, can provide a more reassuring perspective. Surprisingly, this higher timeframe analysis reveals a confirmed breakout accompanied by significant volume. The remainder of January presents an opportunity for the market to close with a gain, symbolizing a potential buy the dip moment.
When analyzing price breakouts, volume plays a pivotal role in confirming their validity. Historical data shows that a breakout with high volume after three years of declining volume carries substantial significance. One such example can be observed with the 1M BTCUSD chart, where a close above the Ichimoku’s Kijun-sen occurred in the years 2020 and 2021, but not in 2019. Additionally, Bitcoin also closed above the upper Bollinger Band, a rare occurrence that only took place in 2020. Such closes, when accompanied by high volume, serve as strong buy signals.
High trading volume signifies increased activity at the current price level, indicating the involvement of significant players in the market. It could be the result of institutional investors or a widespread increase in market participation. Regardless, both scenarios carry the potential for a bullish market. However, the monthly chart must conclude with a green volume bar to solidify this optimistic outlook.
It is crucial to emphasize that this article is for educational purposes only and does not reflect the opinions of NewsBTC regarding investment decisions. Investing in cryptocurrencies inherently carries risks, and readers are strongly urged to conduct their own research before making any investment choices. The information provided should be used at your own discretion and peril.
Although the recent cryptocurrency market crash has generated fear and uncertainty, careful analysis of higher timeframes and trading volume provides a glimmer of hope. The breakout with high volume, after a prolonged period of declining volume, suggests the possibility of a forthcoming bull run in the cryptocurrency market. However, prudent decision-making and thorough research remain vital due to the inherent risks associated with investing in this volatile market.