Bitcoin price correction is harsh, but late bulls could still have an opportunity to buy the dip

• Bitcoin price bottomed at $62,410, resulting in a total liquidation of nearly $570 million.
• A head-to-shoulders pattern could send BTC down 12% to the weekly imbalance at $59,005.
• A break and close above the $69,000 neckline would negate the technical formation.

Bitcoin (BTC) price fell and hovered in the $62,000 area, allowing late bulls to buy BTC about 15% below its all-time high. The impact of the dump spread across the market, leading to millions of dollars in liquidations as the countdown to the halving continues.

Also Read: Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400

Frequently asked questions about Bitcoin, altcoins and stablecoins

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency intended to serve as money. This form of payment cannot be controlled by a single person, group or organization, eliminating the need for third-party involvement in financial transactions.

Altcoins are all cryptocurrencies except Bitcoin, but some also consider Ethereum to be a non-altcoin since the fork occurs from these two cryptocurrencies. If this is true, then Litecoin is the first altcoin to emerge from the Bitcoin protocol and is therefore an “improved” version of it.

Stablecoins are cryptocurrencies designed to have a stable price and whose value is backed by a reserve of the asset they represent. To achieve this, a stablecoin's value is pegged to a commodity or financial instrument such as the US dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an entry and exit ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value, as cryptocurrencies are generally subject to volatility.

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It gives a clear picture of investor interest in Bitcoin. High BTC dominance typically occurs before and during a bull run, where investors resort to investing in relatively stable, large-cap cryptocurrencies such as Bitcoin. A decline in BTC dominance usually means investors are shifting their capital and/or profits into altcoins in search of higher returns, which usually triggers an explosion of altcoin rallies.

Late bulls could still have the opportunity to buy Bitcoin at a discount

Bitcoin price fell to an intraday low of $62,410 on Tuesday, triggering a major market crash. The decline caused a total of nearly $570 million in crypto liquidations, including $458 million in long positions and $111 million in short positions.

Total liquidations

Of this, around $136 million was accounted for by BTC long positions and almost $45 million by short positions. The countdown is on to the Bitcoin halving, which is expected to occur in 30 days.

Although the decline is harsh, optimists see it as a buying opportunity and therefore a healthy correction before the halving. If history repeats itself, the Bitcoin halving could trigger the next bull market, as has happened in previous cycles.

Elsewhere, reports suggest that MicroStrategy added 9,245 BTC tokens to its Bitcoin bag between March 10 and March 18, worth around $623 million. The tokens were purchased at an average price of $67,382. With this large purchase, the business intelligence company now holds 214,246 BTC worth $13.6 billion, which it acquired for $7.53 billion. The average purchase price is $35,160 overall.

MicroStrategy acquired an additional 9,245 BTC for approximately $623.0 million, using convertible note proceeds and excess cash for approximately $67,382 per #Bitcoin. As of 3/18/24, $MSTR includes 214,246 $BTC purchased for approximately $7.53 billion at an average price of $35,160 per Bitcoin. https://t.co/oeYJGgiuy0

— Michael Saylor⚡️ (@saylor) March 19, 2024

Specifically, the purchases were made using proceeds from convertible bonds and excess cash.

Bitcoin price outlook before halving

Bitcoin price action is characterized by a steady increase before BTC peaked at $73,777, followed by a series of lower highs and lower lows. This has resulted in a head and shoulders pattern. This technical formation signals an impending downtrend.

Three consecutive price peaks or two shoulders and a head form the pattern. The head is the middle vertex, which is at the highest level, while the shoulders are the other two vertexes, which are higher on either side. The neckline connects the swing lows of the three tops.

The pattern is complete once the price breaks below this neck line and the target is predicted by measuring the distance between the neck line and the head and overlaying it to the south from the expected breakout point.

If this pattern prevails, Bitcoin price could fall 12% to the weekly imbalance, the Fair Value Gap (FVG), which stretches from $52,985 to $59,005. This could present a buying opportunity for risk-conscious investors. A break and close below its midline at $55,942 would confirm the continuation of the downtrend.

The Relative Strength Index (RSI) supports this outlook by falling to indicate weakening momentum. The Awesome Oscillator (AO) histogram bars are also approaching the mean amid continued profit-taking, boosted by the recent loss of momentum in Bitcoin price.

BTC/USDT 1-day chart

On the other hand, if the bulls impose their will and bulls emerge, Bitcoin price could rally above the neckline. In a very bullish case, gains could take BTC above the $69,000 threshold, above which the bearish thesis would be invalidated.

A flip of the above resistance into support would encourage bulls to push Bitcoin price back to its high of $73,777 or higher. Such a move would represent an increase of almost 13% above current levels.

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