BTC price eyes 30% correction: 5 things to watch in Bitcoin this week

Bitcoin (BTC) heads into a new week after another weekend of major volatility — but this time, the way was down, not up. 

As the market loses $7,000 — the most since the “vertical” price rises began — Cointelegraph presents five things which could keep it moving in the coming days.

BTC dip makes Guggenheim want to sell

Top on the list of topics among Bitcoiners will be the cryptocurrency’s sudden fall over Saturday and Sunday.

From highs of near $42,000, BTC/USD faced a sell-off out of hours, with bears driving down the pair to current local lows of $32,300.

The drop is the most this year and since the Coronavirus caused a cross-asset crash in March 2020, but was widely predicted by analysts, who argued that Bitcoin had become overextended.

“#Bitcoin crashes >10%: The worst Bitcoin plunge since March is reminiscent of the last halving cycle in 2016/2017. The rally was followed by a slump of more than 50% in 2017,” financial commentator Holger Zschaepitz summarized in cautious words on Twitter.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

In fact, a 23% drop is nothing new for long-term Bitcoin hodlers, and the lack of more significant losses suggests that even above $30,000, buyer support remains strong.

“These and upcoming dips are the opportunities you where looking for during the #FOMO feelings you had at $40,000. Use them,” Cointelegraph Markets analyst Michaël van de Poppe meanwhile continued.

At press time, Bitcoin was already rebounding, with $35,000 swiftly following the lows. This was not enough for institutional Bitcoin buyer Guggenheim, however, with CIO Scott Minerd suddenly signalling that the fund would sell some of its BTC position.

“Bitcoin’s parabolic rise is unsustainable in the near term. Vulnerable to a setback,” he claimed on Monday.

“The target technical upside of $35,000 has been exceeded. Time to take some money off the table.”

Others noted the potential bargain for large-volume buyers.

“Institutions are really shaking out all the weak hands to acquire more #Bitcoin,” David Gokhshtein, founder of Gokhshtein Media, summarized about the current status quo.

Biden talks $3 trillion money printing

In the United States, a potential bull sign for Bitcoin in the form of a massive $3 trillion stimulus program from the incoming Biden administration is being masked by a recent rebound in the strength of the dollar.

A classic inverse correlation for Bitcoin, the U.S. dollar currency index (DXY) continued its gains over recent days, heading back above the 90 mark after hitting its lowest levels since March 2018.

Last year often saw dollar weakening give Bitcoin a boost, at a time when other price relationships were steadily breaking down.

“The dollar is so extremely oversold, over-hated, and over-shorted that it all but has to rally for a while at some point soon,” Matt Maley, chief market strategist at Miller Tabak + Co., told Bloomberg.

“The dollar is getting very ripe for a tradable bounce — one that will last at least several weeks and maybe even a couple of months.”

U.S. dollar currency index 1-day candle chart. Source: TradingView

Looking to the long term, however, and it was clear for many this week that the U.S. was simply kicking its real economic hardship further down the road. Incoming president Joe Biden intends to give Americans stimulus checks worth $2,000 as part of a giant money printing exercise, which could be worth $3 trillion.

Should it pass, liquidity from the central bank will expand the most in a single instant since the Coronavirus pandemic began, and will take U.S. federal debt above $30 trillion for the first time in history.

“Time for Plan B,” Danny Scott, CEO of U.K. exchange CoinCorner, responded to the plans.