Bitcoin (BTC) price has been on a tear in recent months, leading to a new all-time loftier at $24,200. Still, BTC saw a correction on Dec. 21 as the disinterestedness markets as well opened in the red. Bitcoin'southward price dropped past 6% on Monday, while the U.S. dollar currency index (DXY) saw a strong bounce.

Such drops and incertitude announced to exist due to the reported emergence of a mutated coronavirus strain in the Great britain and, therefore, more restrictions on the horizon, which could have a big impact on the markets, as seen in March.

Bearish divergence playing out for Bitcoin

BTC/USDT iv-hour chart. Source: TradingView

On the four-hour chart, a surly departure shows the breakup from $24,000 to Mon's lows of $22,000.

Still, zooming out, this is still significantly higher than Bitcoin's toll iii months ago, while such corrections are very common in both bull and conduct markets.

Therefore, such dips shouldn't catch experienced traders past surprise. In that regard, the levels to spotter are shown in the chart above. But for the surly deviation to confirm, Bitcoin'due south toll should refuse the previous area of resistance.

If that rejects at $23,400 to $23,600, more downside is on the table and the higher time frame levels will exist tested as support. Still, if this $23,400–$23,600 region breaks to the upside, a new all-fourth dimension high before the year's end is likely.

$18,500 is crucial

BTC/USDT 1-calendar week chart. Source: TradingView

The only level to spotter for Bitcoin at this point is the area around $18,500. This weekly level has many confluences around the previous best loftier and is the concluding region of consolidation.

On the daily time frame, the recent higher low is establish at $17,500. In other words, Bitcoin'southward price has to sustain above this level on the daily time frame to remain bullish.

Interestingly plenty, based on the weekly chart, a drop toward $12,000 would withal give a bullish outlook to the chart. Yet, such a correction would exist significantly larger than any standard 20% to 40% bull market correction. Merely fifty-fifty such a severe 50% drop would non necessarily break the bull market cycle and would present a great "buy the dip" opportunity.

Markets reeling from DXY bounce

U.Southward. dollar currency alphabetize 3-day chart. Source: TradingView

The DXY index is seeing a slight bounce at the beginning of this week, fueled by the previously mentioned market place uncertainty.

Since investors tend to seek safety in times of crisis and incertitude, such an event could push the DXY index even higher in the curt term. This was seen during the March crash, after which the unprecedented rest canvass expansion by the Federal Reserved marked the DXY height.

Total market cap looking to retest $550 billion

Full market capitalization i-week chart. Source: TradingView

The total market capitalization of cryptocurrencies has been rejected at the best high region, which ways that a correction could be on the horizon.

Frequently, the total-market-cap chart shows a better view of the market'southward state than Bitcoin alone. Thus, a correction to $550 billion would put Bitcoin in the $18,500 region, the crucial brusk-term support zone that must be held to avoid whatsoever more downside.

Altcoins may benefit, in particular, at the beginning of 2021if Bitcoin's price can sustain above $18,500 and outset consolidating from there. Until so, coronavirus fears and uncertainty will likely proceed to hamper the markets.

The views and opinions expressed hither are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. Y'all should acquit your ain research when making a decision.