Bitcoin (BTC), the leading digital currency by market capitalization, has experienced a hiccup in its recent upward trend, struggling to maintain a position above the $27,000 mark. With the absence of encouraging macroeconomic news propelling BTC beyond its upper resistance lines, market pundits are now drawing attention to a chart analysis hinting at BTC’s possible sharp descent towards $20,000. This potential price dip could set a new higher low in Bitcoin’s 1-week chart, echoing its 2019 path prior to the halving event.
Chart Analysis Predicts Potential Downturn
Crypto analyst Rekt Capital recently posted a chart on social media platform X (formerly Twitter), outlining Bitcoin’s potential bearish course. According to Rekt Capital’s analysis, Bitcoin could retrace its steps to the $20,000 level, thereby setting a new higher low on its 1-week chart, a pattern reminiscent of the price movement seen in 2019 before the halving event. BTC’s current trajectory bears a striking resemblance to 2019’s higher low that was achieved pre-halving.
Significance of a Potential Revisit to the Macro Higher Low
Rekt Capital underscores the importance of a potential return to the Macro Higher Low in the current cycle, which could transpire in early 2024, coinciding with the halving year. In the four-year cycle, this would imply that Candle 4’s downside wick would form a Macro Higher Low relative to Candle 3, as depicted in another chart shared by Rekt. Some argue that a second plunge into the Macro Higher Low is improbable, attributing the COVID-19 crash in March 2020 as a black swan event. However, Rekt Capital stresses that the magnitude of a potential forthcoming drop may vary significantly.
Estimations for a Potential Drop
The COVID-19 crash led to a 72% plunge from the 2019 local peak to the March 2020 higher low. However, if the 2023 local peak were around $31,000, a 37% drop would suffice to revisit the higher low. While a repeat of the -72% crash is unlikely, Rekt Capital suggests that Bitcoin could retract -37% without necessitating another black swan event.
At present, Bitcoin, being 210 days away from halving in April 2024, appears to be experiencing a similar relief rally. Rekt Capital draws parallels to the 2019 cycle, during which BTC experienced a relief rally before forming another lower high. It’s suggested that Bitcoin may not require a drastic crash or another black swan event in the upcoming months to reach its Macro Higher Low in this cycle but instead, a retracement of approximately 27% from current prices.
Currently, the largest cryptocurrency in the market is trading at $26,600. Despite experiencing a retracement below the $27,000 level, Bitcoin has achieved a slight profit of 0.7% within the 24-hour period. As pointed out by Rekt Capital, it remains uncertain whether Bitcoin will follow the 2019 path. However, the BTC market is showing signs of stagnation, with a potential price breakout looming on either side.
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