Bitcoin, how to react when strong market corrections occur?

Julien Moretto – 13 Jan 2021

The situation on Monday, January 11 was symptomatic of what is regularly observed on the cryptocurrency market: a panic among some investors who entered the market late and were frightened by a price correction, certainly impressive, but on a pro rata basis to the rise observed previously. So yes, the price of Bitcoin momentarily lost nearly 25% between January 10 and 11. Does this call into question the underlying trend? No. Until proven otherwise, it remains bullish. On Wednesday, January 13, Bitcoin saved a support at €25,000 ($30,000) and initiated a rebound to €28,500 ($35,000) approximately. The zone between €29,500 and €31,500 ($36,000 and $38,000) should now be defended by sellers.

It is therefore important to keep an adapted strategy during bull markets. Taking profits on a small part of your position (10 to 15% of the maximum position) at psychological levels allows you to approach this type of correction much more serenely and possibly to buy back on previously identified areas of interest.

As for the altcoins, it was expected that they would correct with Bitcoin. Ethereum resists well. Cryptocurrencies based on anonymity much less. There is also bad news from XRP and EOS that could accentuate the correction on these values. On the contrary, projects related to DeFi, first of all Aave and Synthetix, resist very well to the current correction.

  • According to CoinGecko, market capitalization is almost stable over one week, at $960 billion compared to $950 billion previously.
  • Bitcoin’s dominance remains established around the 67% market share.
  • The best performance of the top 50 is to be attributed to Maker (MKR) with +92% over one week.

We invite you to discover our video analysis (in french and dated January 12):

Bitcoin (BTC)

Coinhouse’s recommendation :
Buy on support

  • We thus have a new market peak on Bitcoin, at €34,100 ($42,000). Support has also formed around $30,000. We’re keeping a bullish feeling. However, we will not make a hasty buy and wait for the price to come to our areas of interest: either we have an additional downtrend and we will then buy between €22,000 and €24,400 ($26,900 and $29,800), or the price will continue to rise directly. In this case, we will wait until the price finishes one day above the 30,700 ($37,500) resistance level before buying on a bullish breakout. However, we will sell this position if the price falls above $26,900.

Ethereum (ETH)

Coinhouse’s recommendation :
Buy on support

  • Ethereum (ETH) drops only 2.3% over one week, at €875 ($1100). The chart formed an interesting support between 700 and 780 ($850 and 950). If the course returns to this area, it will potentially be a buying opportunity if we have reversal signals. If the rebound continues directly, a daily close above $970 ($1,180) will also be a buy signal to play a continuation of the trend.

Polkadot (DOT)

Coinhouse’s recommendation :
Buy on support

  • Polkadot (DOT) resists very well to the correction we have been observing since last Sunday. It is trading at €7.55 (9.15$), down 4.5% over the week. The zone of Fibonacci 50 and 62% retracements, between $6.86 and $7.56, which we had under surveillance, worked very well to position itself for purchase. A retest of this zone will still be a buying opportunity. Latecomers will be able to buy the bullish break from the previous historical high at $10.60.

Tops & flops of the week (top 50 marketcap)


Tops

1- Maker (MKR) : +92%
2- Zcash (ZEC): +72%
3- Solana (SOL): +57%


Flops

1- Celsius (CEL) : -21%
2- DogeCoin (DOGE) : -15,2%
3- VeChain (VET) : -14,4%

In this article, all information is given for information purposes only, even if it has been established from serious and reputable sources. It does not constitute an offer by Coinhouse to buy or sell digital assets, or an offer to provide services on digital assets, nor does it constitute advice, encouragement or a recommendation to operate on the digital assets in question. It constitutes simple information over which the user holds absolute control. We inform you that if you choose to invest in digital assets, you must be aware of our general terms and conditions of sale (https://bit.ly/2FGW2ek) and accept the various risks listed and defined on our legal warning page (https://bit.ly/3c4sQKc).

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