Traders say Bitcoin price correction a ‘fake out’ before the next leg up

Bitcoin (BTC) price is down by 2.5% today, surprising traders who were certain that new all-time highs were in the cards after the cryptocurrency’s early week rally to $72,000. 

Data from Cointelegraph Markets Pro and TradingView showed that leveraged long traders were caught off guard as BTC price suddenly dropped from a high of $71,980 on May 21 to an intra-day low of $67,550 on May 23.

“Bitcoin is still following a similar path to 2016-2017,” said independent analyst Jelle, reacting to what has become a familiar pattern for BTC in previous cycles.

Jelle said that Bitcoin will enter a parabolic uptrend once it breaks the 2021 all-time highs, projecting a Bitcoin price of $100,000.

Trader and analyst Mags explained that the current BTC correction could be a “fake out,” a pattern it has displayed since bottoming out at $15,500.

“Price consolidates inside a range for a few weeks or months, then it breaks down below the range, trapping all the bears, followed by a quick reclaim and another leg up.”

Jelle also noted that BTC’s recent recovery above $65,000 saw it break “all key resistance levels,” including the 50-day exponential moving average (EMA), which is currently at $64,665.

Jelle further explained that this has resulted in “hidden bullish divergence,” further supporting Bitcoin’s upside.

Related: Bitcoin price at $150K in 2024 is ‘base case’ — Tom Lee

Fellow analyst Matthew Hyland noted that BTC price was close to retesting the demand zone between $64,000 and $67,000, representing the neckline of an inverse head-and-shoulders pattern.

“Bitcoin broke out above the H&S and closed a daily candle above it. A rest of the breakout at $67K is always possible. So, if it were to happen, do not be alarmed. The overall structure is bullish on a higher timeframe. Bitcoin tested the last resistance before all-time highs.”

Popular analyst Wolf Of All Streets shared the following chart, saying bulls would want to see the $67,000 support area (center of range) hold as support. This indicates that the price will now range between $67,000 and an all-time high of $73,835.

The analysts explained that this range provides a technically high risk-to-reward buy.

However, those betting on BTC’s recovery from the current levels lost big on May 23, as the downturn liquidated $159.3 million in long positions worth amid a 24-hour total wipeout of $227.51 million, according to data from Coinglass.

With the latest drawdown, $46.75 million in BTC leveraged positions have been liquidated over the last hour alone, with $39.6 million of these being longs.