- Bitcoin price on the weekly time frame forecasts a potential correction to $34,000.
- The daily chart also flashed a triple bearish divergence that echoes the sell signal on the weekly.
- While the short-term outlook pines for a correction, the long-term outlook remains bullish.
Bitcoin (BTC) price shows signs of slowing down after Thursday’s sudden sell-off that wiped out more than a billion dollars in open interest and hundreds of millions in liquidations. While this caused many altcoins to suddenly crash double digits – before then recovering quickly – others continue to face immense selling pressure. Despite the recent debacle, investors remain optimistic and expect the 2023 rally to continue.
Read more: Breaking: Bitcoin price crashes 8%, wiping out $1 billion in open interest
Bitcoin spot ETF approval window
The approval of a spot Bitcoin ExchangeTraded Fund (ETF) has been the talk of the town in 2023. After multiple delays and no-shows, Grayscale’s victory against the United States Securities and Exchange Commission (SEC), has increased the odds of approval, suggesting even that it might be fast-tracked.
As of November 8, the ETF approval window has opened and extends all the way up to November 17.
As described by Bloomberg’s research analyst James Seyffart, the “ETF window” is when the SEC needs to provide rebuttal comments for delays or rejections for ETF applications. The regulator, which previously declined all 12 applicants’ ETF filings, is now set to provide rebuttal comments or approve them.
In a recent note, James Seyffart added,
A brief window opens on Nov. 9 for the SEC to potentially approve all 12 US spot Bitcoin ETF applicants, including Grayscale's GBTC. It will be open for at least eight days. Even if approvals don't arrive this month, we still believe there's a 90% chance of approval by Jan. 10.
Experts argue that if the approval does come, it will be for all 12 applicants. But a silver lining to this development is that despite the ETF approval, it will take at least a month before the spot ETF launches.
ETF window or not, Bitcoin price has rallied in anticipation of this approval.
Also read: Ethereum price breaks past $2,000 as BlackRock hints at filing for spot Ether ETF
BTC front-runs ETF approval
Bitcoin (BTC) price has front-run the ETF approval news, leading to 121% year-to-date returns. Going forward, it is likely to do the same especially considering the SEC’s position and the ETF approval window.
On November 9, there was a sudden 6% sell-off, which wiped out $1.6 billion in open interest. In total, November 9 saw liquidations totalled nearly $500 million according to CoinGlass data.
BTC OI, total crypto liquidations
Weekly BTC chart forecasts pause in uptrend
On the weekly chart, Bitcoin price has completed filling the Fair Value Gap (FVG), extending from $34,243 to $37,386. Interestingly, this gap is formed around the midpoint of the weekly bearish breaker that stretches from $28,805 to $41,330.
The Fair Value Gap is formed when there is a sudden movement of price in a single direction. The FVG is filled to provide a balanced price delivery.
The bearish breaker is a flipped demand zone with trapped bulls looking to exit. Hence, a retest of the demand zone from the underside is likely to trigger a selling spree. The same can be seen in the weekly chart where the first and the second retest of this weekly breaker in April and June resulted in nearly 20% corrections.
BTC/USDT 1-week chart
The ETF approval news has negated the weekly breaker’s selling pressure, which has pushed Bitcoin price up to $38,000. Although unlikely, if there is a lack of response from the SEC or delays in ETF approval, it could send BTC lower.
Adding credence to the potential pullback scenario is the Momentum Reversal Indicator (MRI), which has flashed a red “one” sell signal. This setup forecasts one-to-two down candlesticks.
After the COVID crash in March 2020, BTC rallied 174% from the $3,782 bottom and set up a local top at $10,380. The MRI produced a similar red “one” sell signal, which led to a 15% crash from the top and produced a higher low at $8,833. Following which, the uptrend resumed.
The current outlook for BTC looks similar. If history repeats, Bitcoin price could revisit $34,000. Interestingly, this level coincides with the newly created FVG, extending from $30,379 to $34.025.
A bounce in this area could be vital to kickstarting the next leg of the bull rally. In such a case, Bitcoin price could easily target the $40,000 psychological level. Beyond this hurdle lies $46,680, which is another key resistance barrier for BTC bulls to to tackle.
BTC/USDT 1-week chart
Daily BTC chart hints at impending correction
On the daily chart, Bitcoin price has set up three higher highs that are not confirmed by the Relative Strength Index (RSI). This non-conformity is termed as bearish divergence and often leads to a retracement in the underlying asset’s price.
The chances of triple divergence playing out will be higher if the upcoming daily candlestick closes are under $37,000. Assuming this outlook takes place, investors can expect BTC to target the sell-side liquidity (SSL) below the swing lows formed since October 27. This move should bring BTC down to around $34,000.
In a dire case scenario, where panic selling ensues, Bitcoin price could slide down into the daily FVG, extending from $30,229 to $32,833. As seen in the chart below, the weekly support level at $31,767 is a good confluence for buying dips.
BTC/USDT 1-day chart
Invalidation scenarios
The following are invalidation scenarios that would sidestep the short-term sell signal and lead straight to a continuation of the uptrend:
- The US SEC approves all 12 filed ETF applications in the ETF window described above: This scenario will not only push BTC past the $38,000 hurdle, but also propel it to $45,000 or higher. Such a scenario would even have enough FOMO to push BTC to a level where it contests 2021 highs of $60,000.
- A daily candlestick close above $38,000 invalidates the bearish divergence sell signal: This outlook will alleviate the short-term sell signal and lead to one of two things – a sideways movement or a slow climb up, until the news flow regarding ETFs drops.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
US presidential election outcome could shape the future of crypto
US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).
Bitcoin Price Forecast: BTC recovers as Donald Trump takes lead on polls
Bitcoin (BTC) slightly recovered to around $68,800 on Tuesday, following a shift in the United States presidential race that saw former President Donald Trump regain the lead, after US spot Bitcoin ETFs experienced an outflow of over $540 million on Monday.
Crypto markets brace for volatility in tight race between Trump and Harris
The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets.
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections
MAGA (TRUMP) trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.