After falling more than 30% from its record high at $69,000, Bitcoin (BTC), could form a “double top” pattern, according to Peter Brandt, a veteran trader who correctly called the crypto market top in December 2017.
The bubble is over. Bull market in $BTC over for some time. For analog look at Gold chart from 2011 on wards pic.twitter.com/AUSiGH0eCg
— Peter Brandt (@PeterLBrandt) December 22, 2017
After a second attempt, the CEO of Factor LLC recalled Bitcoin’s failure to extend its price rise above $65,000. He also highlighted a support level for Bitcoin at the so-called neckline of $30,000 and warned about any further drops below this level.
BTC/USD weekly chart with double top pattern. Source: TradingView, Peter Brandt
Is it possible to have a 50% Bitcoin crash?
Traditional chartists see the formation of two tops consecutively, each leading to strong price retracement to downside, as a sign that there is a bearish reversal. In a double top scenario, the downside target is approximately equal to the height of its formation.
The double top downside target is a bit unrealistic because it would indicate a $35,000 drop in Bitcoin price. In other words, the Bitcoin price could crash below $0 in a perfect universe, which is extremely unlikely.
Nevertheless, Bitcoin may break below the $30,000 neckline, and the ultimate downside target could be the 200-week exponentially moving average (200 EMA) in the chart below. This is currently approximately 50% below current prices, which are close to $23,500.
Daily price chart for BTC/USD with 200-week EMA support. Source: TradingView
As shown in the chart, the 200-week EMA was instrumental in identifying the bottoms of bear markets. However, Brandt reminded:
“Until a chart pattern has been completed and confirmed, it is not NOT NOT A chart pattern.” It is of no interest to me until then.
Another dip in the price of Bitcoin?
Lukas Enzersdorfer Konrad, Bitpanda’s chief products officer, claimed that Bitcoin’s decline from $69,000 – $42,000 was similar to the May 2021 price crash. In which it plunged by more than 50%, but then recovered all of those losses and reached a new record.
“Similarly to recent drops, overleveraged position increased volatility and wiwiped away most long positions,” Enzersdorfer Konrad stated to Cointelegraph via email. He was referring to $2.5 billion worth liquidation within hours on Dec. 4, which caused about 20% intraday corrections in most liquid crypto assets.
The analyst said:
“The Bitcoin market will take some time to recover from these circumstances, and intraday charts can still be volatile, but it’s still bullish in the longer time frame.”
Related: Bitcoin drops below $47K, wiping out October gains — The Bear Market begins
A popular bullish technicals analyst, known as Wolf, presented Bitcoin to be oversold based on its relative strength (RSI) readings on a daily timeframe chart.
BTC/USD daily chart with RSI bounce Source: TradingView, @IamCryptoWolf
Wolf predicted that the BTC price would test $51,780, which Wolf believes will be its next resistance level. With an extended upside target of near $60,000.
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