Bitcoin (BTC) To See Rapid 50%+ Correction If History Truly Rhymes
BTC Analysts Fear The Worst
Call us scared, but a key indicator is showing that Bitcoin (BTC) could soon see a massive correction in the coming future. And by coming future, that means the next few days and weeks.
In a recent TradingView post, an analyst going by “Crypt0Bro” revealed that the Money Flow Index (MFI), a well-known way to determine trends, is clearly showing that Bitcoin is overbought. So much so that the reading on BTC’s one-week chart has reached 95, which is nearing the maximum of 100. The only other times that the cryptocurrency has seen such a reading was in mid-2012, early-2013, and late-2013 which was when BTC was trading decidedly in the double and triple digit range.
While this doesn’t mean anything in and of itself, what happened after does. After MFI reached 95 in the aforementioned historical scenarios, “the immediate price drop was dramatic”. In the first case, the drop was 57%; second, 87%; and third, 71%. And whenever weekly MFI moved above 80 to enter the “overbought” range, at least a drop of 30% was seen in the coming weeks.
As the analyst postulates, if history rhymes, Bitcoin could see a move to $3,345, effectively the yearly lows, or even $2,117. Ouch, right?
He isn’t the only one expecting a drawdown. In fact, countless others have explained that a move lower is likely, albeit not as low as $4,000 or anything lower.
Trader Cantering Clarkexplainsthat while the ongoing move seems incredibly bullish, BTC is still sitting under resistance, and is too far above its 20-week moving average. The 20-week moving average, according to Clark, has and is likely to continue to act as Bitcoins center Bollinger Band, meaning that it should return to that levels vicinity in the near future.
He explains that as it stands, BTC is a good three standard deviations from the norm, with this move being fueled by retail shorts. This hints that Bitcoin may soon see a retracement, returning to more organic and sustainable levels as buying pressure slows in the coming weeks.
And as we suggested in a previous report, history rhyming would see BTC fall by 20% to 25% here, before entering the second phase of accumulation.
Why Bitcoin Is Still Bullish
Yet, there may be some signs that Bitcoin is still looking A-OK, and may actually not be poised to head lower.
As BTC tapped year-to-date highs on Saturday, the daily volume at BitMEX, the foremost crypto futures platform, hit a jaw-dropping nominal $10 billion. Potentially equally as importantly,Grayscales Bitcoin Trustsurmounted $50 million on Friday, signaling interest in cryptocurrency from accredited investors, most of which arepurported to be institutions.
The most important part, this volume surge has been catalyzed by those already in the space. As analyst Joseph Young postulated on Twitter, existing money in the crypto market [is] coming back due to overall growth in confidence/comfort.
And as researcher Alex Kr?ger adds, amid the recent price action, the Bitcoin search term has seen not too much of an increase in volume. This directly implies that once consumers wake up to the latest cryptocurrency rally, the run will be even larger and more violent than it is now. But that begs the pressing question will consumers down the red pill once again?
Title Image Courtesy of Chris Liverani Via Unsplash
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