I’m going to be going over bitcoin and why I could potentially go lower. I’m going to be using technical analysis to give you some price targets, so if that’s interesting, definitely stick around. And if you still have doubts if it’s a good time to buy any crypto, there is the Jet-Bot, which is the most popular copy trading platform. It allows you to earn APYs ranging from 200 percent to 2,000 percent without taking any risks. Binance trading bots can assist you in determining your possibilities for starting your crypto. Register now and get an access to the free 3-day trial period of using the platform.
Now looking at the charts, what I did was I looked back at bitcoin’s 10-year history and tried to identify patterns. My concern was when bitcoin would deviate from these patterns. Were the price targets met?
The first pattern we see is in 2013, when Bitcoin created this symmetrical triangle. It pretty much made it all the way to the apex, broke down, and pretty much hit that bottom price target. Since that bottom target was reached, bitcoin has nearly doubled in value. Then, from 2013 to 2014, bitcoin was in this downward channel.
For a channel, the way you break down or break up, you measure from the top to the bottom of that channel and to the potential breakout point. Unfortunately, bitcoin failed to continue the breakout and it eventually broke down, so what we have to do is bring this target below the channel to the potential breakdown point right over there. That target was pretty much met and held as support throughout 2015. Then in 2018 when bitcoin formed this descending horizontal triangle. This is typically a bearish pattern, but bitcoin pretty much made it all the way to its apex. The way you measure the breakdown target is by measuring from the top to the bottom to the breakdown point right over there, and Bitcoin pretty much hit and nailed that bottom.
In 2019, we had another descending channel like we did in 2014. It is very similar because we did end up breaking up, but because of the cryptocurrency crash, it pretty much failed that breakout. So what did we do? We moved it down, and again it hit that price target at the bottom. If anything, it went a little bit lower, and now we have something very similar going on as well. Bitcoin was in this descending channel. It eventually ended up breaking down. You would measure from the top to the bottom of that channel to that breakdown point. That actually gives us a price target of $13.8 k from its previous all-time high. That would be approximately an 80% correction, which is in line with bitcoin’s previous corrections.
There are two more indicators that I do want to share to back up this price target. Another reason why bitcoin could potentially go down to 14k is because of the bitcoin logarithmic regression band. Now if you look at the ban, it’s done a pretty good job of connecting all the data from the previous price history.
The first thing you can notice is that any time bitcoin fell in this green zone over here, it’s historically been a pretty good time to accumulate, and right now we are in that range. If you go to the bottom of this band, the price is somewhere around $15.6 k, so technically yes, we could bottom out there, but we know that in 2020 bitcoin will go down an additional 21% below the band. If bitcoin does decide to sell off and wick below the green band, an additional 20% below the band will put bitcoin around the $12k range. I’m not saying that a $12K bitcoin will happen, but it’s possible that something like this can happen where the ban could continue. It’s very possible that we could get a small little relief rally and then get a sell-off. That’s very possible. That could happen sometime in late 2022. If we get another massive capitulation and sell off, then I do believe that $14k is definitely possible.
I want to use the Fibonacci retracement tool to get an idea of how low bitcoin could go in the bear market based on the past two cycles, so right now I’m going to measure from the bottom of 2012 to the high of 2013. I’m going to go ahead and measure all three of them first. Then we’re going to go from the low of 2015 to the high of 2017 and the low of 2018 all the way to the $69k top.
At the fib level, this is the 786, and bitcoin went below approximately 40% below the 786, and once bitcoin got back above the 786, it pretty much continued higher. In 2018. Bitcoin went 26% below the 786, and once it went above it, it continued higher. The interesting thing is that the 786 pretty much held as support during the 2020 crash. Right now, bitcoin has not gone below 786 yet, so assuming that we are in a bear market technically, if we go down, you know, 25% like we did last time, that puts bitcoin again around $12.5k, so could we go lower than $14k? very possible. If you believe in diminishing returns and diminishing corrections, we can reduce this correction to about 15%, which will put bitcoin at around $14,000.
Based on all the technical pattern breakdowns, the bitcoin logarithmic regression band and the Fibonacci retracement tools, it all suggests that bitcoin could technically go lower to the $14k range. Now what makes this correction for bitcoin much different than previous corrections is that bitcoin never went through high inflation numbers, never went through quantitative tightening, and never went through a war, so it’s going to be very interesting to see how bitcoin performs. I think it’s important to look at the stock market as well, such as the S&P500, to see how that performs. Based on my analysis, I do think that the s & P 500 could go a little bit lower and that could possibly drag bitcoin down lower as well.
Now that I’ve shared all this what should you do? Well I can’t tell you what to do because I’m not a financial advisor, but I’ll tell you what I am doing. Based on this model alone, as long as bitcoin is ranging in this green zone, I will continue to dollar cost average into bitcoin every single day, meaning I am buying bitcoin every single day even if there’s a possibility that bitcoin could go lower and this is because I could be completely wrong. Based on my analysis, you know, $14k bitcoin could be very possible, but the hope is that I’m wrong. If the market reverses next week or next month, that’s totally fine with me because I’ve been buying bitcoin every single day. I’m not in any rush to buy the dip because I do believe that bitcoin will continue to consolidate sideways for at least a minimum of six months to one year as dollar costs average every single day. I will also be accumulating cash on the side, so if bitcoin does end up dipping all the way down to $14k, $12k or even 10k, then I’ll at least have cash on the side to buy the dip, and if the market decides to go up, well, that’s totally fine because I’ve been accumulating every single day.
Historically, anytime bitcoin was in green zone, the previous time it spent around 850 days, the second time it spent about 182 days before it went up, then it went back down, so if we add it all together, that was about 715 days.
If bitcoin decides to do something similar to what it did in 2019, that means by January of 2023 we could see a small little relief rally. If it decides to do the whole 700 to, you know, 800 days, that means that bitcoin could be going sideways until June of 2024, which is in line with the next bitcoin.
So the point is to prepare yourself mentally in case, you know, prices do drop. You’re not going to be upset. Instead, you’re going to be prepared and ready because you’re going to have cash on hand to buy the dip. Those that have been accumulating cash and have cash on hand ready to buy the dip are the ones that are going to be happy about the dip and excited about the dip.
On the other hand, people who do not have any cash on the side are going to be very upset during the dips because they’re going to miss out on a great buying opportunity. So prepare for the worst, but let’s hope that the worst does not happen.
[This article is a transcription of a video made by Eddie Moon]
Original video: https://youtu.be/2Uf4tyQkONM ]