The cryptocurrency market experienced a significant selloff today, resulting in the loss of nearly $200 billion in value. The market turmoil was fueled by rumors surrounding the potential denial of Bitcoin ETF approvals by the SEC. This sudden drop in prices has likely left many investors feeling uncertain and fearful. However, for those who have been waiting for an opportunity to buy the dip, this could be the perfect moment.
Zooming Out for a Different Perspective
In times of doubt, it is crucial to zoom out and look at the bigger picture. While the daily chart may be filled with alarming red candles, taking a step back and analyzing higher timeframes like the monthly chart can provide a more comforting view. By doing so, we can see that there is a confirmed breakout supported by high volume.
After three years of declining volume, a high volume breakout is undeniably significant. When volume accompanies technical indicators and chart patterns, it tends to confirm price breakouts. For instance, in the example above, the 1M BTCUSD chart closed above the Ichimoku’s Kijun-sen and the upper Bollinger Band in 2020 and 2021, something that did not occur in 2019. A close above the Bollinger Band is considered a buy signal, especially when accompanied by high volume.
High volume signifies increased trading activity at the current price level. This indicates a higher number of orders being filled, which can be attributed to either major market players or widespread market participation. Both scenarios have the potential to drive prices upward, making a high volume breakout an encouraging sign for a potential cryptocurrency market bull run in the coming months.
While the high volume breakout is certainly promising, it is crucial for the monthly candle to close with a green volume bar. This would indicate a gain and further strengthen the bullish case. It is important to note that this analysis is for educational purposes only and does not constitute investment advice. As with any investment, there are risks involved, and individuals are encouraged to conduct their own research before making any financial decisions.
The recent cryptocurrency market selloff may have caused panic and uncertainty among investors. However, after analyzing the higher timeframes and considering the significance of the high volume breakout, this dip could present an ideal opportunity for those looking to enter the market or add to their existing positions. It is essential to approach cryptocurrency investments with caution and conduct thorough research before making any decisions.