Bitcoin has been on a tear, rising eight weeks in a row. This shows that the bulls are firmly in the driver’s seat but suggests that the rally may be getting overextended in the near term. That could be one of the reasons for the sharp fall in Bitcoin and altcoins on December 11.

The fall resulted in crypto liquidations of more than $500 million. Although leveraged traders get burnt during sharp declines, it does not necessarily signal a trend change. A correction in an uptrend is considered a healthy sign as it reduces the excess speculation and shakes out the weaker hands. It also provides an opportunity for long-term investors to add to their positions at lower levels.

Bitcoin soared above the rising wedge pattern on December 2, invalidating the bearish setup. The failure of a negative setup is a positive sign as it attracts buyers. That started a sharp rally, which reached $45,000 on December 5. After a tight consolidation near the 52-week high, the BTC/USD pair broke down on December 11, indicating that the traders were rushing to the exit. That pulled the price down to the 20-day simple moving average (SMA).

In an uptrend, traders generally buy the dips to the 20-day SMA. Hence, it is an important level to keep an eye on. If the price turns up from the current level, the bulls will again try to clear the overhead hurdle at $45,000. If they do that, the pair may surge to $48,000 and then to the psychological level of $50,000. However, the negative divergence on the relative strength index (RSI) suggests that the bullish momentum is slowing down. This signals that the pair may spend some time inside a range or witness a deeper correction in the near term.

The selling could pick up momentum if the price skids below the 20-day SMA. That could open the doors for a fall to the 50-day SMA. This level is again likely to witness solid buying by the bulls. Lastly please check out the advancement’s happening in the cryptocurrency world.

Lastly please check out the advancement’s happening in the cryptocurrency world.