With Bitcoin’s third halving officially in the books, the price movement has been extremely volatile. BTC dropped from a local high of $10,067 on May 9, to a low of $8,117 the day after.
Bitcoin halvings are naturally a bullish event since the supply of total Bitcoin’s is reduced. Yesterday, however, the price initiated a strong upward move, only to be rejected and drop sharply afterward.
Bitcoin Rejection and Drop
Earlier today, the Bitcoin price initiated an upward move that reached the 0.5-0.618 Fibonacci levels of the previous decrease, found between $9,050-$9,200. This level was also strengthened by the presence of the 200-hour moving average (MA).
At the time of press, BTC was trading inside the $8,600 support area, a level which it has not traded under since April 30, with the exception of some long lower-wicks. In addition, while volume has been significant during the drop, it’s significantly lower than that of yesterday’s downward move.
In the same chart, however, we can also see that the price has generated a very significant bullish divergence and there are numerous long lower-wicks that signify considerably buying pressure.
Therefore, the price could still make another attempt at reaching the $9,200 area. However, this current dip is likely a retracement, after which a further downward move is expected. The closest support area is found at $7,700.
The movement before and after the first two halvings differed in quite a few ways.
Prior to BTC’s first halving, the price had dipped for nearly a month but rallied considerably after the event.
In the second halving, the movement different. but there appear to be some similarities to the latest. The price was in an uptrend long before the halving but began to decrease just one week afterward. The downturn lasted for two more months before the price began a long-term uptrend that eventually led to the all-time high price reached in December 2017.
A repetition of this pattern seems to be the most plausible scenario. The price has likely completed its upward formation and is in the process of retracing.
However, the price is still following an ascending support line, which is also supported by the 200-day MA. A breakdown below these supports would confirm that a corrective phase has begun. A bottom near $6,800 is projected using an A-B-C corrective wave formation.