Bitcoin Crashes to $8,900: What Comes After the Brutal 15% Crash?
Over the past few days, Bitcoin has fallen off a proverbial cliff. Contrary to the sentiment of many investors, the cryptocurrency fell through support levels as if they were nothing more than a knife going through hot bricks of butter.
At the drop’s worst on Wednesday, BTC was trading at $8,520 on some exchanges. This means that at the correction’s worst (thus far), Bitcoin had retraced 19% from the local top of $10,500, established on February 13th.
Despite this steep drop from the $10,000 highs, some analysts are starting to explain there are signs that BTC has bottomed, and a subsequent reversal past $9,000 is imminent, noting how Bitcoin is now in the midst of bouncing off key support levels.
Has Bitcoin Bottomed?
Some analysts have made an argument that there are good reasons to believe Bitcoin bottomed.
Filb Filb — the pseudonymous cryptocurrency trader who accurately called that Bitcoin would bottom in the mid-$6,000s and would reverse to the $9,000s by January months in advance — recently noted that he expects for BTC to reverse to the upside around $8,500.
As to why he thinks the price will reverse in the $8,000s, Filb Filb cited a confluence of factors: there exists the 200-day simple moving average, 20-week moving average, 50-week moving average, a “Point of Control of [the] upthrust”, and a CME futures gap all around the price of $8,500.
Also, the stock market has started to see a dramatic increase in volatility, a trend that has historically marked extremely important local and macro bottoms in Bitcoin’s price action over the past five years. The data on this can be seen below.
.@CarpeNoctom suggested spikes in the VIX correlate (spurious?) with Bitcoin bottoms. He's not kidding.
Times the VIX passed 30 in the past 5 years:
Dec 23, 2018: a week after BTC fell to $3,150 Feb 3, 2018: when BTC bottomed at $6,500 Aug 22, 2015: when BTC bottomed at ~$220 pic.twitter.com/vS7E60rNJp
“Legit boys, $6k might not have been the bottom after all. This OI, Basis, Funding is worse than Oct 2018,” he bearishly noted.
He was referring to the fact that these three metrics suggests bulls are still overleveraged, which means that to equalize the market, Bitcoin will need to fall a lot further than where it is currently trading at.