After managing to stay situated above $11,000 for a number of days, Bitcoin (BTC) has begun to slip. This is a far cry from the performance seen earlier this week, with one day seeing Bitcoin post a 20% daily gain.
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However, this rapidly changed when BTC tapped $13,800, failed to break past this key technical level, and subsequently broke down. As of the time of writing this, the cryptocurrency has found itself floundering in the $10,500 range, down 10% in the past 24 hours.
With this poor performance, which has effectively reversed all of this week’s gains, analysts have begun to fear that at long last, Bitcoin may just be poised for a deep correction. But there’s somewhat of a silver lining: this may be the last strong dip before another leg higher, a leg that may bring BTC to new all-time heights.
Bitcoin Bulls Lose Grip, BTC Down 10%
Just hours ago (as of the time of writing this), Bitcoin closed its daily candle, which also happened to line up with the weekly, monthly, and quarterly close. In other words — Sunday’s performance was key. The thing is, BTC didn’t rise to the occasion.
As Nunya Bizniz, a popular trader, points out, the daily close saw BTC fail to hold a key parabola that has held for over six months. This is notable, as the origin of this move stretches back to Bitcoin’s bottom of $3,150.
First daily close beneath the parabola in 6.5 months.
Parabola broken typically = 85% retracement from where parabola began.
Retrace to $4,700?
Ouch! pic.twitter.com/mZ6nQ48o1s
— Nunya Bizniz (@Pladizow) July 1, 2019
Bravado’s lead analyst, Bitcoin Jack, adds that this parabola break marks a rejection of the fifth acceleration of this trend, which comes shortly after BTC broke the sixth and the seventh. The analyst writes that if BTC retests the fifth (~$11,800) and fails to break past it, he would be inclined to enter into a “high time frame short”.
For those not aware of price action in financial markets, an asset’s inability to hold a long-standing parabolic trend is often seen as a very bearish trend. In Bitcoin’s case, each time it failed to hold a parabola, a correction of over 80% from the top was commonplace.
If this pattern comes to fruition now, Bizniz notes that a massive correction to $4,700 could play out. There is no guarantee that such a downturn will come to fruition, but the historical precedent sure is harrowing.
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The loss of the parabola isn’t the only sign a large correction is well on its way. As Level’s Josh Rager points out, the weekly candle that Bitcoin has just closed has historically been a very bearish sign. The candle, known as a “Shooting Star Doji“, is marked by a skinny body (same/similar open and close price), a small bottom wick, and a tall upside wick.
Shooting stars often lead to reversals, which Rager suggests means that Bitcoin may see a “couple of down weeks”.
Some have suggested that this downward price action may continue into the end of July, as Bitcoin has never rallied six months straight in its history, but has already completed five months of upward price action.
Interestingly, unlike on other occasions, there isn’t much contention to the idea that Bitcoin will finally experience some form of a reversal, despite the fact that investors are often divided over most topics and charts.
$BTC Monthly close looks good
Weekly close looks ugly, you’ll likely see this shooting star type of doji all over CT
Which typically is a signal for reversal & we could see a couple of down weeks for Bitcoin
But be happy as that would mean prime buying opportunities ahead pic.twitter.com/szZLVShLKD
— Josh Rager 📈 (@Josh_Rager) July 1, 2019
What’s the Long-Term Outlook?
It is important to note that following the expected weeks of selling pressure, Bitcoin could continue to fall. But, most are sure that once this correction is over, BTC and its altcoin brethren will continue to sprout higher, boosted off “FOMO” on behalf of the retail and institutional audience.
Think Markets U.K.’s Naeem Aslam has claimed that as long as BTC stays above the 242-day moving average, which is somewhat unorthodox compared to the traditional 50 or 200-day, a correction is unlikely. In fact, he quips that in the coming months, a swing to $20,000 is entirely possible.
At what price will see FOMO from those who gloated about 90% crash in $BTC?
Military term, SWAG (scientific wild-assed guess).
My SWAG is $10,000 is price that causes FOMO from those who saw #bitcoin as dead forever.
POLL:
At what price do we see FOMO?— Thomas Lee (@fundstrat) May 12, 2019
In a similar manner, Fundstrat’s Tom Lee last month noted that a move past $10,000 “will see FOMO from those who gloated about the 90% crash in BTC… and those who saw Bitcoin dead as forever.”
Lee, in fact, stated that once $10,000 is passed, there could be a “fast and furious” move to $20,000. And from there, Bitcoin will double in the next five months, reaching $40,000 as BTC enters a new phase of pure price discovery, which should not be hampered by historical resistances.
Featured Image from Shutterstock. Chart Courtesy of TradingView.com
