Before we start with an update on the current situation, let’s take a brief look at the history. Bitcoin had been growing at a record pace in recent months resulting in 6 consecutive months of growth candles. To put it in numbers, it was a continuous increase from $ 9,000 to a record $ 65,000, which is also the current ATH. Following such a brutal growth, it was only a matter of time before the correction would take place.
Weekly chart
This week, Bitcoin fell from $ 46,000 to $ 29,000. It has thus fallen to more than a 50% of its ATH. Some altcoins have even dropped by more than 70%. However, this was to be expected after such extreme growths. But what is next?
I would expect the correction to continue on the weekly chart. At this point, I cannot say whether this was absolute bottom or a new one is yet to come. However, I think Bitcoin is bound to create some side structure in the form of triangles or ABC corrections.
Chart 1: Weekly Bitcoin chart
Daily chart
Looking at the daily chart, we can see that the growth ended with a rising wedge, which is a reversing pattern. From this pattern, we went up to the value of $ 29,000 in the form of an ABC correction. So we tested a strong level and confirmed it as a support. The whole structure would be absolutely fine, if it was not for a massive drop that came within 24 hours and caused a great deal of panic. Have we reached this level in a bit more slowly manner, no one would have batted an eye.
Chart 1: Daily Bitcoin chart
What next?
After such a sharp fall, we have to wait for a reaction. A current weekly candle could tell us a lot. At this point, however, we cannot determine the next development, because we have nothing to build our assumptions on. However, I do not think that the bull market on cryptocurrencies would end for several reasons.
- Quantitative easing and incentives are still ongoing
- Stock to flow model remains intact
- Volumes are still relatively high
- Media and companies are still way too interested in the cryptocurrency world for this bullrun to be over
Comments