Cryptocurrency

Bitcoin could plunge below $20K, indicators show

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After a full year of staying in a parabolic uptrend, bitcoin price is now in a downtrend, marked by flash crashes that sent the top crypto to as low as below the $30K mark.

In recent times, an indicator that has the “parabolic” name on monthly timeframes has given a signal implying that in the past has always ended up in disastrous fall for the largest cryptocurrency by market capitalization.

Despite the resulting sell-off being weak, some experts believe that this could still put bitcoin at the risk of plunging below $20,000 per coin.

The perfect storm for bitcoin

Last year, talks about inflation, supply shock, and nations in turmoil resulted in investors diving into the scarce and innovative emerging assets such as bitcoin and other cryptocurrencies.

Dubbed as the “perfect storm” for the top crypto, the year 2020 saw institutions, hedge funds, and even corporations paying attention to bitcoin. Moreover, the greater crypto market started to grow because of ethereum, DeFi, NFTs, and dogecoin.

Famous and big names were attracted to bitcoin that is now in the portfolios and balance sheets of the wealthy around the world. Many scrambled to buy BTC before everyone else, sending its price on a parabolic uptrend, from just under $4,000 to more than $65,000.

History repeating itself

Back in 2018, when bitcoin broke its parabolic advance, iconic trader Peter Brandt called for an 80% correction for the digital asset. A year later, the crypto leader dropped significantly on the way to its bear market for a full 84% retracement.

According to a certain tool that is able to tell traders when an asset has gone parabolic, bitcoin might even drop further now that the parabola has been broken. There is also the possibility that the drop might be as much as what Brandt called in the past.

 

Image courtesy of Cointelegraph News/YouTube

Jet Encila

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Jet Encila

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