Crypto Winter in Mid-Summer? Bitcoin Gets Cheaper Everyday
BTC/USD Approaches Historical Level. Bulls and Bears Go Head to Head.
During the last 7 days, Bitcoin has shed over 30% of its value and is trading at levels last seen in December 2020. This is also the third visit to the $20,000 level in Bitcoin’s entire “life span”.
Remember the 2017 craze? That year Bitcoin went from $1,000 in January to roughly $20,000 in December. It was Bitcoin’s first $20K visit, which was soon followed by a huge drop that took the flagship cryptocurrency in the $3,000 area twice: once in December 2018 and once in March 2020.
It took Bitcoin exactly three years to reach the $20,000 level again but this time, it shot through it. By January 8, 2021, BTC was trading at $42,000, with no retracements, no pullbacks, and total disregard for overbought levels! By April 2021, after a few retracements, the digital asset was trading at $64,895. However, by May of the same year, BTC had lost more than half of its value, trading at around $30,000.
But Bitcoin is never boring, so by November 10th it was trading at a new All-Time High: $69,000. What followed was the third touch of the $20,000 level and we are living it right now: yesterday, June 16, Bitcoin reached a multi-year low at $20,200 and as I am writing this, it is trading at $20,600. So, what’s next? Let’s take a look at the chart.
Chart Analysis – BTC/USD
The pair is clearly at a turning point and a “bounce-or-break” scenario is in full swing. The star of the show is the $20,000 level, which was last touched in December 2020. At that time, the level acted as resistance and after it surpassed it, the pair traveled a long distance in the direction of the break.
At the time of the 2020 bullish break, the pair was already overbought, thus the chances of a retracement (bearish move) were high, yet Bitcoin doubled its price before making a bearish retracement.
Currently, the Relative Strength Index is also showing an extreme condition (this time oversold) and under normal circumstances, we would expect a retracement (bullish this time). But common rules don’t always apply to Bitcoin and if history repeats itself, the pair may disregard the oversold condition. If this is the case, we will see a sharp drop after the break of $20,000.
The more optimistic alternative is a bullish bounce at the current level and a consequent move closer to $25,000 – $25,400. A conservative approach would be to wait for a clear bounce or break and decide afterward what position to take.