What’s The Worst Case Scenario For Bitcoin? Analyst Explains
in his latest video Cryptocurrency analyst Rekt Capital attempted to answer the question “What’s the worst that can happen to Bitcoin right now?” in an article published on December 21. After hitting an all-time high of $108,374 on December 17, BTC price fell by more than -11%.
How low can the price of Bitcoin go?
Rekt Capital puts Bitcoin into Price pullback From a historical perspective, the historical importance of weeks 6, 7, and 8 in a “price discovery uptrend” is emphasized. He explained based on past cycles (such as 2013, 2016-2017, and 2021) that Bitcoin has a strong tendency to correct during these specific windows, with some drops as high as 34% or more.
“It’s critical to understand these weeks as they tend to cause problems for Bitcoin,” Rekt Capital said, referring to past cycles in which severe recessions occurred. For example, in week 7 of the 2013 cycle, Bitcoin experienced a massive 75% correction in 13 weeks. Likewise, the 34% decline in Week 8 during 2016-2017 highlights the recurring vulnerability during these specific weeks.
Related reading
Bitcoin has experienced a correction of more than 10% so far this cycle, bringing its price into the historically key support area of $96,537 on the weekly chart. Rekt Capital emphasized the importance of this support level, noting that “this historical support level has allowed gold prices to rise to $108,000.” He warned that failure to maintain this support level could trigger a more severe pullback, It fell to $89,830.
Rekt Capital examined price action over the past few days and noted the emergence of a bearish engulfing candle on the weekly time frame, a technical indicator typically associated with a potential reversal. “We are losing resistance and turning into support,” he observed. Such losses suggest a potential correction period as prices struggle to maintain their upward trajectory.
Related reading
In its analysis, Rekt Capital also pointed out the importance of maintaining the 5-week technical line. “If we lose this five-week technical uptrend and the orange trendline, it will become more and more evidence that we may be transitioning into a correction,” he warned.
In addition, he also talked about CME gap With price levels between $78,000 and $80,000, this is a critical area that has yet to be filled. Rekt Capital noted: “Deeping into the 26%, 27%, 28% declines could fill the hole for the entire CME.”
Historically, CME gaps have a tendency to be filled, but there are also some gaps that are never filled.
Despite all the warning signs, Rekt Capital maintains its long-term bullish stance, “These pullbacks set the stage for an uptrend ahead in the parabolic phase of the cycle,” he explains. Drawing from previous cycles, he explains how historical corrections have provided the market with necessary “breathing time.”
For example, in the 2021 cycle, Bitcoin experienced a 16% correction in Week 6 and an 8% drop in Week 8, but the overall trend continued to rise. Likewise, the current 10% retracement, while significant, serves as a preparatory stage for the next phase. The next step in price discovery.
At press time, BTC was trading at $95,000.
Featured image created using DALL.E, chart from TradingView.com
