Bitcoin: Correction Likely to Extend in the Near Term

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Bitcoin: Correction Likely to Extend in the Near Term

’s meteoric rise to a new all-time high of $109,071 on Trump’s inauguration day was short-lived. The cryptocurrency pared those gains and was last trading near $101,760, signaling a potential cooling ******* after its recent surge.

While Trump’s policies have reignited optimism for the crypto industry, marking a sharp departure from the regulatory scrutiny of the Biden era, analysts caution that Bitcoin could face heightened volatility in the near term. Since November 2024, Bitcoin has climbed exponentially, fueled by growing anticipation of Trump’s return to the White House. However, the current uptrend appears to be losing steam.

Trump’s Crypto Stance Sparks Optimism

Expectations for Trump’s administration to usher in a “golden age” for cryptocurrencies remain high. His pro-crypto policies contrast starkly with the restrictive approach seen under President Biden, bolstering confidence among investors. However, as markets adjust to this new reality, Bitcoin’s rapid ascent may give way to a correction.

Meanwhile, the dollar regained some footing on Tuesday after President Trump hinted at imposing tariffs on Canada and Mexico, signaling a more aggressive trade stance than initially anticipated.

Technical Levels to Watch

Weekly Chart:

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Bitcoin’s position in overbought territory suggests that a pullback could be imminent, despite completing a bullish cup-and-handle formation. The cryptocurrency is currently attempting to hold above its immediate support at the 9-day moving average (DMA) of $98,849.

If Bitcoin breaks below this critical support, it could trigger a deeper decline, with the next target at $83,704 likely to be tested within the week.

Daily Chart:

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Following a strong bullish move yesterday, Bitcoin encountered significant selling pressure, forming a bearish hammer candlestick. This pattern indicates potential downward momentum, with Bitcoin now eyeing support at the 50 DMA.

If Bitcoin fails to maintain this support level, a further drop to the 100 DMA at $89,389 could be on the horizon.

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and Caution

While Trump’s crypto-friendly policies have provided a boost to market sentiment, the overbought technical conditions suggest a correction could be due. Investors should closely monitor key support levels as the week progresses, as any breach could accelerate the downward trend.

Disclaimer: Readers are advised to create any position in BTC/USD at their own risk as this analysis is only based on the observations.

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