Bitcoin suffered a notable correction on Sunday as it plunged from its all-time high of $41,000 to as low as $32,250 before finding a bounce.
At the time of writing it is trading back above $35,000 with a market capitalisation of $665 billion.
While lower time frames indicate that more downside price action may be on the cards over the next few days, higher time frames remain bullish with the weekly candle having closed at $38,250.
According to Datamash, a total of $110 million in long positions on derivatives exchange BitMEX were liquidated, with another $6 million being liquidated on Bitfinex.
The four-hour relative strength index (RSI) is now at its lowest point since December 11 when Bitcoin was worth just $17,500.
This suggests that Bitcoin is in an oversold environment and that a local bottom may be in place before a potential rally to a new all-time high.
However, it’s worth noting that Bitcoin had rallied by 137% in the past 30 days, so a correction upwards of 20% is expected even during a clear uptrend.
It’s also important to mention that Bitcoin did not experience any kind of blow off top as it did in 2017, which suggests that the recent high of $41,000 will not be the top of this bull market.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.