Bitcoin (BTC) Falls to $11,000, Loses Key Support Levels: Correction Talk Mounts
Analysts Wary of Bitcoin, Await Correction
After managing to stay situated above $11,000 for a number of days, Bitcoin (BTC) has begun to slip. This is a far cry from the performance seen earlier this week, with one day seeing Bitcoin post a 20% daily gain. With this poor performance, which has effectively reversed all of this week’s gains, analysts have begun to fear that at long last, Bitcoin may just be poised for a deep correction.
So, what exactly are analysts thinking, and what is the cryptocurrency market looking like from a technical standpoint? Well, as popular trader Mr. Chief/Halo Crypto points out, the recent move to $10,500 sees BTC break under a key uptrend line, one that has held since early-June when the asset was around $8,000. BTC has since recovered, finding itself at $11,000, but the technical damage may continue with the break under this line.
And as Josh Olszewicz of Brave New Coin points out, Bitcoin’s four-hour chart recently put in an inverse “Adam and Eve” bottom pattern, with a critical support of $11,000. With BTC looking poised to close a four or six-hour candle under $11,000, bears might just be in control of this nascent market.
This isn’t the only harrowing sign that a bearish reversal may be had. As reported by Ethereum World News previously, analyst Nunya Bizniz recently pointed out an interesting fractal (a previous bout of price action that plays out at different times) on Bitcoin’s one-day chart. He notes that 2018’s crash and 2019’s strong recovery is looking a lot like the price action seen in 2011 and 2012, which was the crypto market’s first full-fledged cycle.
During this period, Bitcoin rallied to new heights, fell by 94%, saw a rapid bounce by 260%, to then fall by 46%. Bizniz notes that if history is of any indication, Bitcoin could see a 46% decline, which would bring it back to the $7,000 range. This seems absurd, but considering that this rally took the place of only a few months, such a correction isn’t off the table.
More importantly though, Bizniz noted in a later tweet that Bitcoin recently broke under a parabola that it has held for upwards of six months. This is notable, as the origin of this move stretches back to Bitcoin’s bottom of $3,150.
Bravado’s lead analyst, Bitcoin Jack, adds that this parabola break marks a rejection of the fifth acceleration of this trend, which comes shortly after BTC broke the sixth and the seventh. The analyst writes that if BTC retests the fifth (~$11,800) and fails to break past it, he would be inclined to enter into a “high time frame short”.
For those not aware of price action in financial markets, an asset’s inability to hold a long-standing parabolic trend is often seen as a very bearish trend. In Bitcoin’s case, each time it failed to hold a parabola, a correction of over 80% from the top was commonplace. If this pattern comes to fruition now, Bizniz notes that a massive correction to $4,700 could play out. Ouch