Bitcoin rose to $ 33,000 after falling by $ 29,000. Therefore, BTC/USD did not go further and the rate is corrected again. This could be a continuation of the fall in BTC, the target of which is at $ 20,000.
Let’s look at the monthly chart. BTC in January is still in positive territory and this is the fourth green month in a row:
In order for January to go into the red zone, BTC/USD must drop below $ 29,000 and, unfortunately, so far this option seems quite possible for the following reasons.
After the collapse in March last year, Bitcoin actually flew straight up on rocket fuel. On the weekly chart, we can see only two corrections that lasted more than a week and the price then fell by 10% and 14%, during the struggle for the levels of $ 10,000 and $ 12,000:
Even Bitcoin finally passed the previous maximum of $ 20,000 on December 16 of last year, we began to talk about the fact that after such a feat the bulls need to take a break. But as you know, the price flew straight up and reached $ 42,000 at the moment, will there be any reckoning after that?
Let’s take a look at the past Bitcoin cycle. Then we set the previous high at $ 20,000. A good indicator of market sentiment is the 21-week moving average. We see that the price constantly returns to this line, and then in 2017 we had several intermediate cycles:
So, for 13 weeks from April to July, Bitcoin grew and then corrected to this line. Then history repeated itself, but it took only 9 weeks for the growth and correction from July to September. And then there was the final cycle, during which Bitcoin grew without a correction in the 21-week moving average for 13 weeks, there was only one red candle. What happened next, you know very well, over the next seven weeks the price came to this line, losing almost 60%:
In fact, this moment can be considered the official beginning of the “crypto winter”.
We saw another continuous 11-week rally without a correction to the 21-week moving average in 2019:
Then we also had a protracted fall by as much as 42% and then the rate went even lower. Today we see that the price has been growing continuously for 13 weeks:
We do not count two small red candles. Now we look down, and the support from the 21-week one is now just below $ 19,000. This is a very large gap between the current price and this line, so what is happening now may well be the beginning of a deeper correction.
Please note that this is not a financial recommendation and you do not need to go to the exchange right now and open short Bitcoin up to $ 20,000. Under no circumstances do this. We just share our thoughts with you, but you have to listen to our conclusions, find more information, conduct your own analysis and only then make a decision.
Supporters of wave analysis also say that the fall is not over yet. According to Elliott’s analysis, the bitcoin price should now be in the fourth corrective wave. It is still too early to say that it is over.
The targets of such a correction, as mentioned earlier, can be $ 25,000 or even $ 20,000. And if you believe in this theory of waves, then the fall cannot go strictly downward. It will move with constant upward pullbacks, and there should even be an intermediate wave B in the middle, during which the price will rise well. On the daily chart, we see that we had a drop of $ 30,000, then an increase to $ 40,000, from there again fell below $ 30,000:
On the one hand, this is a classic Elliott’s correction of three waves A, B, and C, but in fact, this entire structure may well be only the first wave, within which prices move up and down:
In this case, the fall is just gaining momentum, and even if we see good growth now, the price will still not go to renew the current highs.
Today many crypto enthusiasts expect that as soon as US dollars are distributed, Bitcoin will skyrocket again. This is a justified opinion on one condition – Bitcoin must show growth at that time. For people who did not understand the essence of the first cryptocurrency and did not study its history, it will be extremely difficult to buy now when the price is falling.
We say this quite seriously if now Bitcoin keeps falling to $ 20,000, then no one will rush to buy it en masse. They will come running to the market after the price goes up again and reaches $ 50,000.
Therefore, we do not rely heavily on liquidity, rather, now we should wait for the continuation of the arrival of smart money on the market from large players. If they continue to provide support, the cycle will continue. And the behavior of altcoins will personally tell us how likely this is. While they are repeating the dynamics of bitcoin, therefore, the growth cycle is still at an early stage.
In the near future, we expect that altcoins will begin to grow faster than the first cryptocurrency, which is hinted at by the decline in the share of bitcoin in the market.
But the general direction of price movement will still follow Bitcoin.
The second important point is how the data from Google Trends will behave.
At the end of 2017, the popularity of Bitcoin was slightly higher, but then it was the end of the cycle, and now it is the beginning. If, in Google’s trends, Bitcoin can gain a foothold at the current values, therefore, the market continues to gain momentum and as it becomes known, the price will also rise.
And the third important indicator that we will look at is the same 21-week moving average. The price does not have to move strictly towards it right now, but to confirm the growth cycle in our understanding, we must come to it in the near future. And then there will be the most important moment, whether we go further up, which means that the native awaits us ahead. Or we will fall down, which will be a hint that the current cycle has come to an end.
We still believe that everything is just beginning, and a reversal from this line and at least the fifth wave of growth according to Elliott awaits us. Therefore, prices of $ 50,000 and, possibly, $ 100,000 at the moment are quite achievable even this year.