Bitcoin’s breaking major resistance, call it $105k. This fight has had everyone wondering if the current bull run is coming to an end. There are many factors behind this resistance, and knowing them is key for investors and enthusiasts to help make this technology a reality. This article will look at each of these factors, discuss possible price corrections, and provide tips on how to make sense of today’s volatility. Shocking Token wants to cut through the noise with simple and entertaining market sentiment analysis that keeps you smarter than the competition.

Understanding Bitcoin's Resistance Levels

As bitcoin’s price doesn’t jump in a straight line, it runs into resistance along the way. These levels are usually grounded in psychology, past price movement, and technical analysis. Understanding these points of resistance is critical for investors looking to make a smart, measured investment.

Key Resistance Factors

Several factors contribute to Bitcoin's struggle to break through the $105,000 barrier:

  • Round numbers or psychological levels: Prices like $95,000, $70,000, $60,000, and $35,000 often act as significant psychological barriers. Traders tend to place buy or sell orders around these levels, creating support or resistance.
  • Previous high or all-time high: Bitcoin's price might struggle to break through levels like $105,000 or even $109,000, as these have been previously reached and rejected. This is because traders who missed the initial move might look to exit their positions around these levels, creating selling pressure.
  • Moving averages (MAs): The 50-day and 200-day moving averages can act as dynamic resistance levels. For instance, the 200-day SMA, currently around $88,690, could present a challenge for Bitcoin's price.
  • Historical price action: Past resistance levels can become future support levels, and vice versa. For example, $20,000, which was a strong resistance before being broken in December 2020, can now act as a support level.
  • Institutional buying and selling: Large institutional trades can significantly impact Bitcoin's price, creating sustained upward or downward pressure. Monitoring institutional activity can provide insights into potential resistance levels.

Is This a Temporary Setback or a Broader Slowdown?

The recent attempt to get above $105,000 is alarming. Is this merely a blip in the market, or the beginning of a bigger long-term market pullback? Though the pushback against the rule is very much warranted, a few key reasons point to this being a temporary technical fix.

With Bitcoin’s price action, it still appears like a short-term technical correction. All of this is occurring amidst the backdrop of skyrocketing Bitcoin adoption and an overall more positive crypto regulatory climate. Outside of on-chain Bitcoin BBTC 4% whales accumulating, market structure, and qualitative fundamentals—all continuing to point to that the correction is indeed a bear trap. Perhaps some of this selling is positioning to de-risk ahead of CPI inflation report due on May 13th. Traders too are no doubt expectant of possible market volatility. I think the Trump trade deal with China is now fully priced in. That may have added fuel to the recent correction, particularly when Bitcoin couldn’t find a way to rally and hold some sort of support above $104,000.

Historically, Bitcoin has seen significant corrections. It is important to note that during the last bear market from 2013-2015, it dropped 86.64%. In the bear market of 2017-2018, it fell 84.04%, and in the decline from 2021 to 2022, it decreased by 77.57%. These corrections, important as they have been, have typically been followed by sharp relief rallies.

Navigating the Current Volatility

Here are some trading strategies that can be employed:

  • Day Trading: This involves buying and selling Bitcoin within a short period, often just a few seconds or minutes, to capitalize on small price movements. Day traders use technical analysis, market sentiment, and news to make informed decisions.
  • Swing Trading: A medium-term strategy that seeks to capture price swings over several days or weeks. Swing traders use technical indicators to identify trends and make trades.
  • Dollar-Cost Averaging (DCA): This strategy involves investing a fixed amount of money in Bitcoin at regular intervals, regardless of the market price. DCA can help reduce the impact of volatility and timing risks.
  • Scalping: A short-term strategy that involves making multiple trades in a single day to take advantage of small price movements. Scalpers rely on liquidity and tight spreads to maximize profits.
  • High-Frequency Trading (HFT): This strategy involves using powerful computers to rapidly execute trades and take advantage of small price inefficiencies in the market.

Expert Opinions and Market Outlook

The most recent technical analysis for Bitcoin has strong “buy signal” with a 1-week rating. That might indicate promising prospects for additional development to come. Gold, on the other hand, shot up 61% in a week. In the last month alone it increased by 9%, and it’s up 4% from where it was a year ago. In doing so it demonstrates the asset’s potential to produce highest-of-highest returns, but at much higher risks.

Further, the global Bitcoin market size in 2021 was valued at USD 17.05 billion. This burgeoning market is expected to continue booming at a blistering pace, with an expected compound annual growth rate (CAGR) of 26.2% between 2022 and 2030. The exchange segment dominated in 2021, accounting for over 45.0% of the revenue share. At the same time, North America became the leading region and accounted for more than 29.0% revenue share. After all, Bitcoin’s price has been nothing short of a roller coaster. In May, almost $1 trillion disappeared from its total worth as other cryptocurrencies, like the meme-coin Dogecoin, have experienced wild surges and declines. This kind of volatility is a good reminder of the need for prudent risk management practices.

Though the $105,000 resistance is an ever-present area of concern, for now the outlook is cautiously positive. Investors need to be alert, trade smart, and control their risk to be successful. Shocking Token will continue to provide updates and analysis to help navigate the evolving crypto landscape.