Why Bitcoin’s Next Bear Market Will Be The Worst Yet

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The price of bitcoin continues to fall, and when it does not fall, it is barely able to move sideways, with “only” the only direction the cryptocurrency will not go.

Whether or not the crypto market is heading into another bear market is debatable at this time, but technical analysis suggests that when the peak of this cycle comes, it could lead to the worst bear market in crypto history. -change.

Analyzing the secular Bitcoin Bull Run

A secular market is defined as “a market that is driven by forces that could be in place for many years, causing the price of a particular investment or asset class to rise or fall over a long period of time. “.

“In a secular bull market, positive conditions such as low interest rates and strong corporate earnings are pushing stock prices higher,” read one except in Investopedia.

Since the birth of cryptocurrency, Bitcoin has only known a bull market. The technology was born during the Great Recession just at the start of quantitative easing. The stock market has mostly seen a rise since then, and the price of Bitcoin itself rose from $ 0 to $ 65,000 at a local all-time high.

The uptrend never ended once in this period | Source: BLX on TradingView.com

Even technical indicators, such as the Average Directional Index, suggest that the leading cryptocurrency by market hasn’t really seen a bear market, despite what past withdrawals might feel for those who have been through them. But the trends aren’t complete until the ADX reads less than 20 – or the dotted line above.

Related reading | Bitcoin ready for a show of force, but in which direction will it break

The tool also shows that the strength of the bulls (in green) decreases while the bears (in red) get stronger with each major wave. But that’s still not the signal that suggests a much worse crash at the end of the next cycle.

Why the next crypto bear market could be the worst yet

Cryptocurrencies are a speculative asset class, first born with Bitcoin. No one really knows how to place a value on the asset, and therefore the price action can be more volatile. Since speculative assets are driven more by investor sentiment and emotions, they respond particularly well to certain types of technical analysis, such as Elliott Wave Theory.

Elliott Wave Theory is simple yet complex, and is based on the idea that markets move in response to pulsed waves. These waves and their potential paths and outcomes can be predicted with some degree of accuracy, as long as certain characteristics and conditions are present.

According to Thomas Bulkowski, the ending diagonal “is a special type of driving wave that mainly occurs in the wave position 5 when the price has moved too far and too fast”.

Does Bitcoin form an ending diagonal? | Source: BLX on TradingView.com

Bulkowski calls this a form of “up or down consolidation” and says that “in any case, the ending diagonal ends the movement of larger patterns”. The ending diagonal is the result of an extended fifth wave which has a set of five impulse waves in the wedge-shaped ascending shape.

Related reading | Bitcoin trend strength indicator suggests bull run is not over yet

When it finally collapses, the price action could correct to where the pattern started to form, which would be above $ 1,000 – but below the bear market low of 3. $ 000. If Bitcoin is really going to hit the hundreds of thousands of dollars per coin and the ending diagonal pattern is accurate, things could get a lot more volatile than anyone ever imagined.

Follow @TonySpilotro on Twitter or via the TonyTrades Telegram. The content is educational and should not be taken as investment advice.

Featured image from iStockPhoto, charts from TradingView.com

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