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28.03.2023 10:51 AM
Bitcoin continues to decline amid mass profit taking: where are the potential correction targets?
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Bitcoin continues its consolidation movement within the usual range of $26.7k–$28.9k. After a strong bullish week, trading volumes collapsed from $40 billion to $14 billion on Monday. As of March 28, the figure rose slightly to $18 billion.

The cryptocurrency is subject to powerful bearish attacks, but remains stable within the range of $26.7k–$28.9k. While Bitcoin manages to hold this area, do not expect a downward movement.

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Moreover, holding the area where more than 700,000 BTC have been purchased for several months preserves the chances of the cryptocurrency to continue its upward movement. However, this scenario is relevant under certain conditions.

More liquidity in the U.S. economy?

The emergency lending program is the main catalyst for the growth of the cryptocurrency market. Despite all the efforts of the Fed, investors are massively moving funds into cryptocurrencies, precious metals and other instruments.

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Moreover, BBG reports that the regulator is considering the possibility of expanding economic support for banks. One option could be to expand the emergency lending program, which will positively affect the capitalization of cryptocurrencies.

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At the same time, analysts at Morgan Stanley say that investors' expectations for S&P 500 reports seem overstated. This suggests that the markets are overly positive and the risks this poses to the capitalization of the stock market and, consequently, the cryptocurrency market.

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The next key factor for the Bitcoin price movement will be March 31, when the statistics on U.S. GDP for Q4 2022 will be released. New data on the labor market is also expected, which remains stable against the background of a rate hike.

BTC/USD Analysis

The combination of these factors can provoke the next stage of the upward movement of Bitcoin to the levels of $31k–$32k. The dependence of the asset price on the emergency lending program is confirmed by CoinShares data, according to which the influx of investments in crypto funds last week amounted to $160 million.

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This is direct evidence of the massive movement of capital, as well as the search for alternatives against the backdrop of problems with the U.S. banking system. At the same time, a final upward spurt and a protracted correction below $25k may become a more obvious scenario for the development of events.

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In this scenario, the price of BTC, with the help of large injections of institutional investors, makes the final push to the $30k–$32k range. This is an additional opportunity to take profits, and knock out sell orders above $30k.

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Subsequently, the price will make a false breakout of one of the levels of the $30k–$32k range and go to storm the $27k–$28k support zone. As we have already noted, it was in this zone that the stage of mass accumulation took place. Therefore, a full-fledged correction of BTC will begin with a full-fledged consolidation below the $27k level.

Results

Bitcoin is gradually exhausting the potential for an upward movement, and at such moments we should expect a final impulse growth and further decline. The key factor for the decline is a strong resistance zone, as well as massive profit-taking.

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For the resumption of the upward movement, the asset needs to trade within the $22k–$27k range. After a consolidation above $27k, large layers of liquidity will form here. Taking this into account, it is worth expecting a corrective movement with the targets of $27k, $25k and $22.4k in the medium term.

Artem Petrenko,
Analytical expert of InstaForex
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