Bitcoin dropped to a two-week low as $ 6 billion options were about to expire

The Bitcoin (BTC) price has fallen lower, about 20% since its recent all-time high at $ 62,000 in mid-March. Since the cryptocurrency market is so volatile, this is most likely a wave. Another normal price decrease in the current bull cycle.

It is necessary to adjust to strengthen the momentum to go up further because the market cannot go up in a straight line. Additionally, the record $ 6 billion options contracts are expected to expire on March 26, which usually brings some volatility.

Bitcoin must reserve the $ 53K level in order to gain bullish momentum


4-hour BTC / USD chart | Source: TradingView

The 4-hour chart shows a clear downtrend since the recent all-time high at $ 62,000 with bearish support / resistance flips.

In it, Bitcoin’s price was rejected by a key resistance zone at $ 56,500 in the latest rally after Tesla announced that it had begun accepting Bitcoin payments in the United States. Since BTC failed to break out of this level to move higher, new tests of the $ 53,000 support zone were inevitable.

The $ 53,000 support zone has weakened due to being tested multiple times in recent weeks, so the price broke below it on March 25 and dropped to as low as $ 51,500.

Hence, Bitcoin price must now regain the $ 53,200 – $ 53,800 zone to revive any upward momentum in the near term. If that doesn’t happen, the price is likely to drop to the next support zone between $ 49,500 and $ 51,500.

The overall structure of the uptrend remains strong


Daily BTC / USD Chart | Source: TradingView

The daily chart of BTC / USD still paints a bullish outlook that shows higher lows and higher highs. In that view, even if Bitcoin corrects to as low as $ 44,000, the uptrend is still in effect.

In that regard, Bitcoin price currently has a strong support zone between $ 49,500 and $ 51,500 and is unlikely to drop further.

Additionally, the bearish divergence is not confirmed until the market starts making lower lows and lower highs below $ 44,000, as outlined above.

The dollar shows strength


Daily DXY chart | Source: TradingView

The US dollar is showing strength once again as yields are also increasing significantly. So it’s not surprising to see risky assets drop, namely commodities and cryptocurrencies.

A rebound in USD often leads to a downtrend in the cryptocurrency market, especially in the short term. But this latest rally in the dollar may be temporary as it is approaching a stiff resistance. Furthermore, the structure still shows lower highs and lower lows, meaning a trend reversal is likely to happen soon.

Hence, if the dollar’s rally is stalled, then Bitcoin and the crypto market will be more likely to rise in price.

A possible scenario for Bitcoin


4-hour BTC / USD chart | Source: TradingView

Bitcoin’s 4-hour chart shows a downtrend, where a retest of the $ 53,200 – $ 53,800 zone is likely to be rejected. Therefore, a further decline in the short term is the most likely scenario at the moment.

The green area shown in the chart above is the area to watch for potential bullish divergence or immediate bounce. If such a move occurs, the ideal scenario for the bulls will then be to establish a higher low.

Once a higher low is established, Bitcoin price will continue to rise towards the next key points of $ 68,000 and $ 82,000.

Use Elliott Wave to determine Bitcoin’s upcoming outlook

Bitcoin (BTC) price has been falling since hitting an all-time high of $ 61,844 on March 13.

Regardless of the drop, bitcoin is expected to recover soon – even under a bearish wave count scenario.

Long-term wave count for BTC

The number of waves most likely shows that BTC is in the five (white) long-term wave of a bullish impulse that started in March 2020. The number of sub-waves is shown in orange and indicates that BTC is in the sub-year wave.

The most likely target for the top of the move is found at $ 67,000. After that, a significant correction will be expected.


Daily BTC / USDT chart | Source: TradingView

The number of sub-waves and the number of sub-waves (in black) are shown below. They are rather irregular, due to the second small sub-wave, the irregular flat wave.

There is enough alternation between subwaves two and four, so this is considered a valid number of waves.

Furthermore, due to the short-term parallel channel, it is more likely that this number of waves is accurate.

Wave count will be invalidated at $ 50.203, which is the highest level of the first sub-wave.


6-hour BTC / USDT chart | Source: TradingView

Number of alternate waves

The number of substitutions most likely suggests that BTC is still in the quadruple wave (orange).

In this case, the most likely scenario would be a running flat model. In this case, BTC could drop to the support line of the channel at $ 47,000. This is also the 0.786 Fib retracement level of the entire up move.

Although there may be an irregular flat, the drop since the all-time high on 13 March did not seem impulsive. Hence, it seems unlikely.


12-hour BTC / USDT chart | Source: TradingView

If BTC is indeed in the small (black) Y sub-wave, then the drop should be an impulsive move. However, the ongoing slump doesn’t seem impulsive at all.


6-hour BTC / USDT chart | Source: TradingView

Hence, even if this is the correct number of waves, a significant bounce would be expected before another one.


6-hour BTC / USDT chart | Source: TradingView

Conclude

There are two scenarios for the current movement of BTC.

The increased wave count seems most likely. Even if Bitcoin moves by the number of bearish waves, a short-term rally is expected before another one.