- Due to the fractal on the price chart bitcoin your price predictions point to the frightening scenario of $20,000 or even below.
- Investors will have confirmation of this collapse if BTC fails to hold the psychological $30,000 level on its weekly timeline.
- An invalidation of the bearish view may be possible if BTC generates a higher high above $52,000.
bitcoin priceIt is trading at the closely watched psychological level and at the same level it traded last month. From a macro perspective, intraday volatility doesn’t seem to matter much because the chances of a big sell-off pushing Bitcoin to 2017 levels are still very high.
How Will Bitcoin Respond to Its First Recession?
While technical analysis continues to debate why a crash is inevitable, the current bad situation in the financial markets is fueling the discussion. Ecoinometrics noted in a recent report that the US interest rate has reached a 40-year high and the Federal Reserve is likely to respond by lowering interest rates.
After the global markets had been in such bad shape before, there was a recession for a while. Some examples of this issue include the DOTCOM bubble between 1999 and 2000, the 2008 Global Financial Crisis, and most recently the COVID in 2020.
In all these cases, risky assets such as the stock market were subject to very hard selling. But after the recession ended, these risky assets started to recover. On the other hand, gold, which is considered a store of value, experienced relatively minor selling and an even faster recovery.
Recently, Bitcoin has been highly correlated with the stock market and is not showing any signs of divergence any time soon. This intense correlation seems to have started after the COVID crash and continues even today. If this relationship continues, BTC is likely to suffer the same fate as the risk assets or stock market that it was exposed to during previous recessions.
While inevitable, this outlook reveals that during a crisis, the price of Bitcoin could be subject to massive selling pressure.
Tough Selling Pressure Might Be On The Way For BTC
Bitcoin price is showing a bear flag setup within an already ongoing bear flag on the daily chart. As we mentioned in our previous news, the larger technical formation triggered the downtrend on May 6 and has been collapsing ever since.
Altogether, this move triggered a 36% loss in one week. Looking at the big picture, however, shows that Bitcoin’s all-time high of $69,000 to $32,837 between November 10, 2021 and January 24, 2022, formed the flagstaff of the model.
You can read the rest of the analysis here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.