Is Bitcoin a Good Buy Amid Market Corrections?

Market corrections often witness the devaluation of a handful of assets, while others remain somewhat stable despite riding the same wave. Bitcoin, often regarded by many as a robust store of value, may be a strategic buy for investors and traders amid market corrections.

The world's most popular cryptocurrency recently experienced a short squeeze, surging from $49,000 to nearly $63,000 after being heavily oversold. However, this surge may simply be a standard bounce, often seen after mass liquidations, potentially leading to a lower high and subsequent bearish continuation.

Despite the global market showing signs of recovery and decreasing fears of a recession, there remains significant speculation and optimism on social media platforms like X (formerly Twitter).

Daily time frame analysis

BTCUSDT - 1 Day Time Frame

Bitcoin faced rejection at the daily 12/21 Moving Average (MA) bands, signaling a continuation of the downtrend. Currently, Bitcoin is not in an uptrend on either the daily or 4-hour timeframes.

A reliable confirmation of a trend reversal would be when the 12/21MA bands cross and turn green. If Bitcoin does manage to continue higher and this short squeeze isn’t over yet, the marked Order Block, and Bitcoin does manage to continue higher and this short squeeze isn’t over yet, the marked Order Block is likely to be revisited.

This area, which existed before the significant sell-off triggered by liquidations, is where many spot holders are expected to step in and sell on a lower high, a behavior observed consistently since March.

Market recovery outlook

The broader market's recovery is expected to persist, provided no new negative news emerges. The recent retest and reversal from the February 2021 Pivot could signal a potential bottom for Bitcoin.

However, for optimal risk management, it is prudent to wait for a clear bottom to form before entering any new positions.

The blue path in the analysis suggests a possible scenario where a solid entry could be made above the Pivot, with targets set at the Order Block or the Point of Control (POC), marked by the Fixed Range Volume Profile. This area has already seen a strong retest, and from a long-term perspective, the ideal bottom formation would occur between the Value Area Low (VAL) and the POC.

Such a formation would build substantial positions and potentially provide the strength needed to revisit the highs above $70,000, shifting Bitcoin’s market structure back to a bullish one.

Another potential scenario, represented by the black path, is that Bitcoin may revisit $53,000 and establish a bottom there. Although this level may not be as attractive, it could still build sufficient positions to support a stronger rally.

Short-term and long-term investors are advised to exercise caution when accumulating Bitcoin, despite improving market conditions, as crypto waters tend to be volatile in times of uncertainty.