This week’s market pullback has prompted Bitcoin (BTC), the largest digital currency by market capitalization, to retest several crucial support levels. As the price begins to bounce back from the recent lows, some analysts suspect that the weekend could bring a favorable shift for investors.
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Bitcoin Bounces Back From $78,000 Decline
Over the last week, Bitcoin has faced substantial selling activity, raising concerns about a potential market peak. The premier cryptocurrency has plunged 21% from last week’s peak of $99,000, falling below the $80,000 mark for the first time since November.
This correction resulted in BTC dropping close to 30% from its all-time high (ATH) in January and trading beneath its price range following the US elections. A week after the market downturn commenced, Bitcoin reached a new three-month low, retesting the $78,000 support early Friday.
Numerous market observers remarked that BTC’s latest drop has approached and partially filled its November 2024 CME Gap between $78,000 and $80,700. Rekt Capital noted that Bitcoin is experiencing a “robust rebound against the partially filled CME Gap and is doing so with above-average seller volume.”
The leading cryptocurrency has risen about 7% from today’s lows, stabilizing between the $83,000 and $84,000 support zone for the past several hours.
For analysts, the CME Gap support and sell-side volume will be two pivotal indicators to monitor over the weekend, as ongoing and consistent BTC sell-side pressure is unsustainable, with seller fatigue potentially accelerating in the days ahead.
Bitcoin is finally beginning to encounter above-average seller volume. There’s still potential for additional seller volume to enter the market, but the likelihood of Seller Exhaustion happening is increasing. And Seller Exhaustion typically precedes price reversals.
Is A Weekend Recovery Imminent?
Crypto analyst Jelle pointed out that Bitcoin has made “three drives into deeply oversold territory” this week and is retesting the local lows before today’s decline, suggesting that “a weekend relief appears to be probable.”
The analyst emphasized that reclaiming the $84,500 support is vital for BTC’s recovery as “the prior two retests led to new lows.”
However, he mentioned that today’s rebound appears distinct because BTC “is touching the 200-ema cluster” for the first time this week and has broken above it. In Jelle’s view, this could indicate an “exciting weekend,” with the new CME Gap at $93,000 open.
Rekt Capital highlighted that Bitcoin “has filled every CME Gap that has emerged since mid-March 2024” and that only the newly created CME Gap between $92,800 and $94,000 remains open after this retracement. If BTC maintains this trend, the price could rebound to fill the new gap shortly.
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The analyst has outlined two possible scenarios for BTC’s ongoing “downside variation.” Per the post, Bitcoin’s price may revisit $93,500 by the week’s end if the deviation “is to end up as a downside wick.”
Conversely, if the variation “is to conclude as the Post-Halving deviation featuring Weekly Candle Closes below the Re-Accumulation range,” BTC’s price could revisit the $93,500 level in the upcoming two to three weeks as “part of a post-breakdown relief rally.”
At the time of writing, Bitcoin trades at $85,120, reflecting a 0.5% increase in the daily timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com