Investor’s Guide to Navigating Bitcoin Price Volatility Through Multiple Scenarios
- Bitcoin price is showing a tight consolidation after the recent crash of 17% to $21,283.
- A breakdown of the $20,750 support level could lead to a 15% sell-off to a low of $17,578.
- However, a sweep to $20,750 followed by a quick recovery could lead to a 12% bounce to $23,175.
Bitcoin price appears to have slipped back into consolidation following the recent market selloff. This development leads to an increase in uncertainty, investors wonder whether to start dip buying or taper off their investments.
Bitcoin price in suspended state
Bitcoin price faced massive selling pressure at $24,664, also known as the midpoint of $17,578 to $31,749. After several declines here, BTC crashed nearly 20% and retested $20,750 for the third time in the past month.
A breakdown of the ongoing consolidation can go in two directions:
- A sweep of the $20,750 level followed by a rapid recovery.
- A breakdown of $20,750, leading to a crash that could relive the June 19 swing at $17,578.
Investors can assume that the first scenario is unfolding, considering the upcoming Merge update for the Ethereum blockchain on September 15. The Merge-led rally seems to have caused many altcoins to explode as its bull run.
As the scheduled date approaches, capital could very likely flow from BTC to ETH and other altcoins. This could cause the Bitcoin price to consolidate around $20,750 without a target. But, if the capital is split between BTC and ETH, a quick sweep followed by a recovery seems like a plausible outcome.
The bounce could see the Bitcoin price retrace to the intermediate resistance level of $22,500. If buyers continue to keep up the pressure, an extension of this recovery to $23,175 seems likely and on the cards.
BTC/USDT 4-hour chart
Alternative scenario and its consequences
But, if the Bitcoin price ignores the upcoming merger and turns the $20,750 support level into a resistance barrier, it will confirm a bearish resurgence. In such a case, let’s take a look at the higher time frame chart.
The daily outlook for BTC shows that it has been consolidating and crashing since the start of 2022. The recent crash has pushed the Point of Control (POC) to $21,177, which is the highest traded volume level since June 10.
A breakdown of this level can result in a 10% drop to approximately $19,000 Even in this bearish outlook, this is the level last support point for Bitcoin price.
Although unlikely to happen in the coming weeks, a breakdown of the aforementioned support area lead to a catastrophic crash to these support levels – $15,500, $13,500 and $11,900.
BTC/USD 1-Day Chart
While these scenarios explained above are mildly bearish to extremely bearish, let’s take a look at the positive outlook for BTC. This narrative will emerge if the Bitcoin price rises from its current position of $21,327 and turn the $25,000 barrier into a support floor. Such a move would invalidate the beraish theses.
Doing this will indicate that the bulls are back and 45% crash in the first half of June is ready to be undone. In such a case, BTC must clear the previous highs of $32,384 and create a new one.
This development will be the first confirmation of a bull rally. In such a case, the market participants must be on the lookout for a lower low relative to the recent low of about $20,750. If successfulwill this move be one to buy and expect BTC to take off to successive resistance levels – $35,000, $45,000 and so on.
