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A flurry of historical Bitcoin fractals suggests that Bitcoin will continue its decline by another $3,000.
Veteran trader Peter Brandt made the bearish call in a tweet published Thursday, hours after Bitcoin fell by up to 16.31 percent from its local high of $19,500. He added that the cryptocurrency might extend its downside correction until it hits the lower $14,000 levels, citing similar bearish moves during the 2015-2017 bull run. Excerpts:
âDuring the 2015-2017 bull market in Bitcoin (BTC), there were 9 significant corrections with the following averages: 37% decline from high to low [followed by] 14 weeks from one [all-time high] to the next [one].â
Bitcoin Fractals
Bitcoin rallied by almost 100 percent six weeks in a row, hitting its yearly high at $19,500 just this Monday. Prospects of growing institutional investments, followed by a favorable macroeconomic outlook led by a depreciating US dollar and negative-yielding debt, allowed the cryptocurrency to grow as an alternative hedging asset.
But the rally also made Bitcoin an overbought asset, as Bitcoinist covered earlier. That increased risks of a blowoff top, i.e., profit-taking by traders, which led its price lower by more than $3,000 in the first half of this week. Only Mr. Brandt thinks that the selling action is far from over, going by how Bitcoin behaves historically after exponential bull runs.
âA 37 percent correction from the local top would bring the Bitcoin price to as low as $14,235,â he noted. âMany traders who swore they would buy a big dip when [the] price was above $19,000 will actually become sellers under $15,000.â
Supportive Technicals
Mr. Brandtâs bearish target near $14,000 has two strong technical backers.
First, the level coincides with Bitcoinâs previous resistance areas. For instance, in January 2018, the cryptocurrency briefly tested $$14,253 as a price ceiling before turning lower for the rest of the year. In June 2019, BTC/USDâs bull move topped out at $13,868, also very near to Mr. Brandtâs downside target.
Second, Bitcoinâs 20-weekly moving average (20-WMA) sits at $12,928, expecting to close above $13,500 should the price consolidates following the latest dip. That further brings BTC/USD within the range of Mr. Brandtâs bearish target near $14,000. Meanwhile, the 20-WMA also holds a record of maintaining Bitcoinâs bullish bias.
âA 20 weeks MA serves as support [level] in a bear market [and] as a resistance in a bull market,â said a pseudonymous analyst. âThe price of Bitcoin returns to it over and over again. Maybe, âThis-Time-It-Is^Different,â but I personally donât think so, and I will wait for that MA test.â
In case the price flips bearish on the 50-WMA support, it would risk undergoing an extended downside correction towards the 50-WMA. It sits near $10,000.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.