Near-Term Challenges for Bitcoin
Despite the long-term positive outlook, Martinez cautions that Bitcoin may face challenges in the near term. This is primarily due to the cost basis of individuals who have held the cryptocurrency for less than 155 days. In the event that Bitcoin’s price falls below $38,130, short-term BTC holders might find themselves in a precarious situation.
According to the analyst, Bitcoin is currently experiencing its fifth significant market correction since the initiation of its bullish momentum last year. In this bull market, four notable corrections have occurred. These corrections include a 12% drop over 12 days, a 22.6% fall over 15 days, and two approximately 21% dips each lasting around 60 days.
Currently, Bitcoin is undergoing a 21% correction that has been ongoing for the past 12 days. If the cryptocurrency fails to maintain support at $38,000, Martinez warns that it may correct down to the $33,000 level.
Key Support Levels for Bitcoin
A close below $38,000 on the weekly chart could indicate a downturn for BTC, with the potential to target the strong support cluster around $33,000. This crucial area encompasses several technical elements, including the lower boundary of a parallel channel, the 0.5 Fibonacci retracement level, and the 50-week simple moving average (SMA).
As of the time of writing, Bitcoin is trading at $39,718, showing a slight decrease in the last 24 hours.
Investors are advised to conduct thorough due diligence before making high-risk investments in Bitcoin, other cryptocurrencies, or digital assets. It is essential to acknowledge that transfers and trades are undertaken at one’s own risk, and any losses incurred are the sole responsibility of the individual investor.