Crypto Analysis | BTC Bearish Scenario!

over 1 year ago

Good day Hiveians!

Join me in analyzing the crypto markets!

This post is a follow up to the "BTC Bullish Scenario" post

It's always good to look at both extremes as the truth often resides in the middle between the two. That being said, let's see why BTC could fall to ~12k before recovering but also why I am favoring the bullish scenario. The following chart is one of the most simplest charts by just connecting the lows of a cycle on the monthly/weekly chart which gives us trend lines that accurately predicted the lows of the following bear markets. That is, if you look closely, price still fell "a bit" after it hit the trend line, but it was basically the end of the bear market with a largely sideways moving market. But you can also see that for this cycle we get two lines.

This is due to the extreme correction in 2020 when price crashed to ~3k. This gives us two trend lines: one in the monthly chart and one in the weekly chart (there are of course other scales one can look at, but these are the most common one used and therefore the best indicators in my opinion). Essentially what it boils down to is that this ambiguity leaves room for either scenario to play out. I think I have put forward some good reasons for why BTC has completed it's downward movement in the last post, but since this is the bearish post, let's see why BTC could also be heading to about 12k.

The first argument already stated is that we have this lower trend line intersecting price at around 14k which leaves a bit further downward momentum to 12k. This would basically be a replication of the pattern we have at 17-20k, just at 12-14k

If you look at past bear market corrections we can also see that they have been steeper than the current one down to ~18k. We are "only" down 73% and could potentially go down to at least 81% which would be more in line of previous corrections.

There is little doubt that prices could easily go down another 38% from the current 20k levels to meet this lower end of the target. That is quite a big drop still.

A third important factor for more corrections is the current unstable global financial and geopolitical situation. The stock market had almost recovered back to previous highs last week and still has a very long way to go down if the US and the world economy should indeed fall into a recession or depression. The drop then actually hasn't really started yet... But I wonder if BTC would really follow this movement as we are already down 73%. It is hard to imagine BTC could go down another 70% which means that we should see some sort of a decoupling from stocks and cryptos in the near future (or an actual recovery in the financial system).

Conclusion

While especially the last point is probably the reason why the majority of people are still bearish for BTC I wonder whether the now often proclaimed target of 12k is not a similar mirage as the 100k+ target most analysts predicted for the bull market. In other words, if too many people talk about a target and are setting up trades accordingly the makret usually does the opposite or falls short of that target. We didn't get the 100k for the bull run and so there is a point to be made that we also won't be getting the now often talked about target of 12k. From a fractal point of view BTC has completed it's bear market correction. We could therefore also easily see a reversal to 35k+ in the coming months and probably one more pullback dwon to current levels before again going into the bull market. In either case, the next bull market is probably coming around a lot sooner than most think.

As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!