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In a flash, nearly $200 billion in value was wiped out of the cryptocurrency market today in a larger selloff driven by rumors that pending Bitcoin ETF approvals could end up denied by the SEC. Despite the carnage across crypto today, this could be the moment dip buyers have been waiting for.
Recapping The Crypto Market Flash Crash
At around 6AM this morning, Bitcoin price began falling, causing a cascade of liquidations in altcoins. Bitcoin dropped nearly 10% while altcoins fell anywhere between 20 and 30% from local highs.
The move has likely caused a lot of fear, uncertainty, and doubt. And when in doubt, you’re supposed to zoom out. Moving away from the daily timeframe and into higher timeframes like the monthly can provide comforting view in contrast to the nasty wick left behind on the daily chart.
Instead, the high timeframe view shows that there is a breakout confirmed by high volume. The market has the rest of January to close with a gain, turning the volume bar green. If it does, this could prove to be the ideal buy the dip moment.
Volume precedes price | TOTAL on TradingView.com
Why A Breakout Could Be Confirmed By The End Of January
A high volume breakout after three years of declining volume is undeniably significant and could hint at a cryptocurrency market bull run in the coming months. Volume tends to confirm price breakouts when paired with technical indicators and/or chart patterns.
In the example above, 1M BTCUSD closed above the Ichimoku’s Kijun-sen. This didn’t happen in 2019, but did in 2020 into 2021. Not pictured, Bitcoin also closed above the upper Bollinger Band – another situation that only happened in 2020.
A close above the Bollinger Band is a buy signal, especially when confirmed with high volume. Volume being high represents more BTC being traded at the current price.
The more trading volume, the more orders being filled which often is due to either big players or widespread market participation. Both scenarios are potentially bullish, but the monthly must close with a green volume bar.
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
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