Is Bitcoin heading for another crash? Here’s what the data says

[ad_1]

Bullish and bearish symbol with stock market concept.

Bitcoin (BTC), the leading cryptocurrency by market capitalization, has been trading in a sideways trend since its fall from the $28,000 level. At the time of writing, BTC is currently valued at $26,800, having seen significant declines across all timeframes. The question on everyone’s mind now is whether this downturn will continue or if Bitcoin is headed for another crash.

Can Bitcoin Holders Expect Another 40% Drop in the Coming Weeks

Cryptocurrency enthusiasts and traders are keeping a close eye on Bitcoin’s performance after its recent price drop. According to Miles Deutscher, a veteran cryptocurrency analyst, Bitcoin usually experiences a temporary rally after a drop, followed by a new low 5-8 weeks later.

Deutschers analysis shows that in 2020, bitcoin price fell 56% in 59 days after its initial rally. Similarly, in 2021 Bitcoin price fell 24% in 47 days, and in 2022 Bitcoin price fell 42% in 40 days.

Historical patterns of BTC after its initial rally. Source: Miles Deutscher on Twitter.

That said, with BTC trading at $26,800, if it takes a 20% drop, its price will likely drop to $21,440, while a 30% drop would take it down to $18,760. A 40% decline would result in a price of $16,080, potentially bringing Bitcoin back to the 2022 bear market low.

Is 2023 still the best year for BTC?

On the other hand, according to cryptocurrency analyst Adrian Zdunczyk, historical data suggests that the pre-election years are the best performing years on record for Bitcoin, with a 98.8% chance of a bull run. in 2023. Even though the worst six months of the year usually begins in May, Zdunczyk thinks an uptrend will likely emerge in the coming months.

Looking at the weekly chart, Zdunczyk notes that Bitcoin is currently experiencing a full return to the 200-week trend, completing the mean reversion. While a strong correlation (0.42) exists between Bitcoin and the S&P 500, the critical support near $25,000 was defended. However, if this support level breaks, traders could see prices fall to the lower $20,000 zone.

Additionally, Zdunczyk believes that further downside is possible if Bitcoin stays below $30,000. However, after a successful retest of the 200-day baseline, the support level was confirmed by several techniques. During this time, there was a deterioration in the 50-day average volatility and the long-term trend temporarily exhausted.

Zdunczyks’ analysis suggests that a clear head and shoulders pattern has been achieved, with a technical target of $22,000. However, if the pattern fails to break, it could trigger a cascading rally past $35,000.

The BTC BPRO indicator places local resistance at the $28,000 level. Source: Adrian Zdunczyk on Twitter.

As seen in the chart above, local resistance is currently at $28,000, supported by BirbicatorPRO (BPRO) analysis. The bears maintain control until there is a strong close above this level. Bitcoin bulls should wait for a decisive break above $30,000 to ensure a more reliable uptrend.

The sideways price action of BTC on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from iStock, chart from TradingView.com

[ad_2]