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Bitcoin has been on a path of correction since hitting a new all-time high of $108,135 on December 17. Notably, this correction has caused the leading cryptocurrency to fall by around 10% to the time of writing and even falling below $93,000 very quickly.
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This notable decline has led Bitcoin to retest the Bollinger Bands, and technical analysis suggests an upswing from here to reach a price target of around $178,000.
Bitcoin retests the monthly upper Bollinger band
Bitcoins recent price correction has caught the attention of crypto analyst Tony Severino, who highlighted a critical retest of the monthly Upper Bollinger Band. Sharing his insights on social media platform
According to him, this development mirrors a similar pattern observed in January 2024, which eventually led to a substantial rally after a similar retest.
According to the daily candlestick chart shared by Tony Severino, the upper Bollinger Band is currently just above $96,000, which is around Bitcoin’s current price. This retest of the Bollinger Band suggests that Bitcoin could be entering a new phase of upside momentum after the recent corrections.
Historical echoes: January 2024’s 86% rally provides a blueprint
Severino’s analysis draws parallels between the current price movement and Bitcoin’s behavior earlier in 2024. He noted that in January 2024, a similar retest of the monthly upper Bollinger Band preceded an 86% rally in Bitcoin’s price.
At the time, Bitcoin was trading around $46,000, following a strong price increase that emerged from late 2023. However, a brief correction occurred in January, with Bitcoin’s price falling to $40,000 to test the upper Bollinger Band. This test not only acted as a springboard for a sustained rally, but also caused Bitcoin to break its then all-time high, surpassing $70,000 for the first time in its history in March.
If Bitcoin were to repeat this 86% rally at this point, it could rise to around $178,000, which Severino said aligns with the upper limit of his target zone. In another analysisthe analyst predicted that Bitcoin could reach its market top as early as January 20, 2025.
At the time of writing, Bitcoin is trading at $96,402, still hovering around the upper Bollinger Band. Interestingly, the major cryptocurrency is currently down 2.11% and 5.4% over the past 24 hours and seven days, respectively.
This withdrawal has led to its realization of over $5.72 billion in Bitcoin gains, which has contributed to the short-term selling pressure. The impact of this correction is clearly visible in Bitcoin’s Relative Strength Index (RSI), which has fallen sharply from 69 on December 17 to the current reading of 45.
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However, there are reasons to believe that selling pressure may be easing. This is because the RSI level of 43 has been acting as a key support zone for Bitcoin since September. If this support holds, it could provide the basis for Bitcoin’s price towards $178,000.
Featured image from ABC News, chart from TradingView