Bitcoin has seen a sharp correction over the last few hours after dropping from $9,800 on Monday to yesterday’s low of $8,988 amid a bearish building momentum as well as expanding volatility. As of the time of writing, the cryptocurrency trades for $9,258.
The good news is that Bitcoin’s price has managed to bounce back after exploring areas under $9,000. In the early hours of Thursday, BTC tested the $9,200 support level and has gone on to consolidate yesterday’s losses in a range above this key level.
Looking ahead, the flagship crypto is finding strong bids near the $9,200 support level, and if the bulls fail to defend this crucial support, there could be another sharp decline in the near term.
The next major support is seen near the $9,000 level, below which the bears are likely to aim a test of the $8,800 support zone.
Bitcoin Geared up to See Strong Correction
The fact that BTC has successfully held the $9ks for almost 2 months now has been interpreted as a bullish indication by some traders and analysts. Indeed, this recent consolidation is very similar to that observed at the beginning of Bitcoin’s last bull market.
However, BTC trader and analyst DaveTheWave isn’t convinced of the bullish sentiment and shared the chart seen below.
The analyst, who predicted that Bitcoin would retrace to $6,400 when no one thought that would happen, says that after a strong rally of over 100% from March’s lows, a 25% correction in the cryptocurrency market is likely. This would result in a BTC price of $7,000.
DaveTheWave has made several accurate medium-term predictions, calling that BTC would top its 2020 bull trend around $11,000.
S&P 500 Correlation Could Reinforce Bear Trend
Ahead of the Wednesday stocks opened, futures tied to the U.S. benchmark index dropped by 0.8% as investors assessed signals from the economy, including a resurgence in virus infections in parts of the U.S. and China.
Moreover, Julian Emanuel, the chief equity and derivatives strategist at investment company BTIG LCC noted that the S&P 500 could fall further in the coming session.
A crash in the S&P 500 could drive Bitcoin lower due to its uncanny correlation with stocks as traders scramble to cover their margin calls by selling crypto to seek cash liquidity.
The next BTC plunge could be significant, but technical analysts find $8,600 to $9K a safe downside target.