Record-breaking rally sees BTC/USD at $34,800

Bitcoin’s price is sliding after hitting a new all-time high of $34,800

Bitcoin (BTC) price hit a record-high of $34,800 on Sunday, surging by more than 34% in a week to begin 2021 with a bang. The weekly outlook for the cryptocurrency suggests we are likely to see a pullback as technical indicators signal bullish exhaustion.

Bitcoin’s weekly chart showing a spike to a new all-time high. Source: TradingView

It is likely the downside seen over the past several hours will continue and push prices towards lows of $30,000. Despite this, the crypto sphere remains bullish about BTC/USD in the year ahead; with analysts predicting that prices could surge to $75,000—$100,000.

At the moment, the price of Bitcoin is screaming for a sharp correction as can be seen by the negative-inclined RSI on the 4-hour chart. The dip from an overextended position for the RSI could be critical short term, given the last time, BTC price reversed when the indicator was touching the 88-90 region and went down nearly 80%.

A look at the 4-hour chart shows BTC/USD has reversed but bulls are holding strong above $32,000. The BTC/USD pair will likely bounce to recent highs before slowing to retest support levels around today’s prices. In this case, the cryptocurrency’s price movement could form a bearish head and shoulders pattern.

If the bearish pattern completes, it could inform a correction of 25-30% in the short term.

BTC/USD 4-hour chart. Source: TradingView

On the downside, bears are likely to prevail if bulls fail to keep prices above the 20-SMA ($31,559). An extended downside on increased selling volume could see prices fall to lows of $26,000, signalling a potential end to the parabolic rally.

Further rot could see prices tank to the robust support zone near the $24,000 area, with $21,000 likely to provide further comfort in case of an over-extended downside.

However, if an upside rally resumes on strong buying volume, it is likely prices could retest the main resistance level near $34,800. Above this level, buyers could target $37,000—$38,000.

At the time of writing, Bitcoin is trading near $31,700, just below the previous resistance level at $32,000. From a technical perspective, bulls need to hold prices above or around this price level to prevent a retest of old support zones below $30K.