Bitcoin (BTC) is still in correction mode, with the BTC price dropping below $ 17,600 on December 11, its lowest level since November.
Bitcoin in a downtrend on lower timeframes
Nowadays some recent news the proposed crypto regulation in the United States brings fear to the otherwise euphoric market. However, other markets have also suffered this week, with stocks cooling down as well.
The 4-hour chart implies a clear downward trend. Such a downward trend is confirmed by lower peaks and troughs, as shown in the chart.
First, the price of Bitcoin failed to break through its all-time highest region, after which $ 18,500-18,700 formed a strong support area for a week.
Any bounce from this area (as the arrows show) marked a weaker bounce, as lower highs were constantly forming. After three tests, the support failed and the price of Bitcoin dropped to the next support level between $ 17,600-17,800.
This support zone delivered a slight rebound to $ 18,500-18,700. To turn bullish, this zone had to flip for support, which it failed. This rejection confirmed the bearish reversal of support / resistance, after which the downtrend resumed.
In general, the downtrend will always show lower highs and lower lows until a clear bottom is found. However, it doesn’t seem like the market will discover it anytime soon as higher timeframes are eager to move south too.
Bearish divergence on the daily time frame is confirmed
The daily chart indicates a potential bearish divergence that is ready to be played out. This bearish divergence will be confirmed when the price of Bitcoin falls to break through $ 18,600-18,800.
In this sense, previous resistance becomes resistance again, confirming the overall weakness of the markets and that more downward effects are likely.
Based on the daily chart, the support zone is at USD 16,000 as Bitcoin’s price bounced strongly out of that region last month. It is also the first massive support zone in the daily time frame.
To turn bullish in the short term, Bitcoin’s price has to reclaim the USD 18,600-18,800 area for support. That would invalidate the bearish divergence and any bearish outlook for the meantime.
Total market capitalization is expected to be $ 400 billion
The total market capitalization of cryptocurrencies saw a massive increase towards $ 600 billion. This marker was also the 1.618 Fibonacci level which is one of the most vital Fibonacci levels.
More importantly, the total market cap chart showed a higher high of $ 600 billion. This higher high means that the market is in bull territory and will look for a new higher low to confirm this uptrend.
The levels to watch on the total market cap chart are about $ 470 billion and most likely about $ 400 billion. The latter is the previous resistance zone and should be viewed for a potentially nice support / resistance flap.
More downside to BTC does not benefit altcoins. The correlations are still very high in the cryptocurrency markets, meaning altcoins are likely to suffer from Bitcoin correction.
However, once Bitcoin hits its next bottom, altcoins will likely be well positioned to outperform Bitcoin again on shorter time frames.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the view of Cointelegraph. Every investment and every trade move carries risks. You should do your own research when making a decision.