Bitcoin (BTC) price has crossed the $42,000 mark, but we have yet to see it close above this level. The resistance test occurred a few hours ago, and it’s difficult to predict the path BTC’s price will take following this resistance test. What do the current data tell us, and what should investors expect in the coming days? Here are the details.
Cryptocurrencies Could Fall
With the rise in Bitcoin’s price, there has been a general recovery in cryptocurrencies. It does not make sense for altcoins to rally while BTC is declining, so it’s important to monitor the performance of the king cryptocurrency. BTC, which has been on the rise for seven weeks, is now expected to correct from the overbought zone.
The reaction to BTC at $42,000 is extremely important. The resistance test, which is still very fresh, could lead to high volatility. For now, investors watching the market are contemplating which levels to watch if quick profit-taking pushes the price down.
Following the tough $42,000 resistance, if a pullback occurs, the daily chart highlights that the support level to watch is at $36,000. Should this support fail to hold, Bitcoin could retract to the $34,100-$32,400 range, corresponding to the 0.5-0.618 Fibonacci levels.
In the event of a pullback to $34,100, we might also see the July 2023 resistance confirmed as support. Indeed, such movements are not uncommon.
What Will Bitcoin’s Price Be?
If the expected correction does not occur and BTC’s price continues to move steadily upward, we could see a rally up to $48,500 after a close above $42,000. This level is the long-term 0.618 Fibonacci retracement measured from the all-time high to the bottom of the cycle. If the intermediate correction is not as deep as feared, this could be the level we see for BTC in the coming days.
For now, optimism for an ETF approval remains strong, but if the U.S. Department of Justice moves the BTC seized in the Silk Road operation, it would complete the news flow for a downturn. On the other hand, the Justice Department had already stated that these would be sold by the end of the year, and this FUD could snowball by the end of the month.
In the most optimistic scenario, the Justice Department could sell the assets it holds through bids on Coinbase to potential ETF issuers. Indeed, this could be a big news event that might even surpass the $48,500 level, turning the tables on those expecting a downturn.