Bitcoin bulls may be in for a shock as an old fractal predicts a price crash to $20,000.
First spotted by Jacob Canfield, an independent market analyst, the fractal highlights Bitcoin’s tendency to fall towards its 21-week exponential moving average or yearly support after reaching its all-time high. For instance, in the 2013-2014 session, the cryptocurrency retreated by 36 percent after rising by more than 600 percent to its then-record high of around $1,165.
Mr. Canfield feared that traders might use the old fractal as their cue to short Bitcoin specifically as its rally turns overheated. He stated that at near $30,000, the cryptocurrency “is at the perfect 1.618-extension” (referring to the Fibonacci retracement graph between $3,149-low and $19,792-high).
“As it stands, the weekly 21EMA sits around $18,000 (but is dynamic as it moves up),” he noted. “A 36 percent drop from $30,000, which happens to be the perfect 1.618-extension, would land us back at $20,000 exactly.”
THEN AND NOW
The analyst highlighted a flurry of pessimistic scenarios that could cause a price crash, ranging from a March 2020-like stock market crash to a significant FUD against stablecoin Tether (skeptics accuse the dollar-pegged token of inflating Bitcoin prices artificially).
The yield on long-term Treasury bonds has slipped below the expected inflation rate. Not only it had reduced the interest in the debt, but it has also decreased the US dollar needed to purchase it. That has effectively moved institutional investors into riskier assets, benefiting Bitcoin alongside.
Among ETF-like firms, New York-based Grayscale Investments holds 572,644 BTC worth $16.17 billion.
“We wouldn’t view these events [corrections] as long-term negatives for Bitcoin, but if such events unfold, they may negatively impact broader market sentiment and prices,” Mr. Grider added, nevertheless.
BTC/USD was trading at $28,952 at the time of this publication.