Some bitcoin investors will be extremely jittery right now as the bitcoin price took a good tumble this morning. Is the wick down to the $58,000 price level the limit of the damage, or is it the beginning of a far more extensive correction?
Nearly the entire crypto market has plunged into the red over the last few hours as bitcoin saw fit to take a quick 5.5% haircut. The question remains that is this it? Or will the correction need to be deeper in order to liquidate the high leverage that has recently been employed by retail investors?
A classic looking head and shoulders pattern has materialised on the lower time frames, the price target for which is at the $53,700 level. However, on the way down there is significant support at around $58,000, and then finally at $55,000.
Retail has come back into the market and has upped the leverage to extremely high levels, not seen since last April. It is very likely that this has contributed to the bitcoin price dip, as investors on high leverage are historically always liquidated when enough of them are onboard.
This could be a sign that this correction will actually be quite short-lived. Bitcoin does seem to have stabilised around the neckline of the head and shoulders pattern, and so it wouldn’t be a surprise to see a recovery take place from this point on.
For investors who have been trying to get into the top-performing altcoins, this is a good opportunity to buy the dip. Polkadot (DOT) fell to support at $38, but has immediately surged back to $41.50 at time of writing. With parachain auctions fast-approaching on the horizon, the price is likely to rise in November.
Fantom (FTM), also wicked down to $2.50 but has since recovered to $2.85. The Fantom Developers Conference is currently taking place this week, and positive news announcements could well send the price on a recommencement of its upwards trajectory.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.