The crash in the crypto market is becoming increasingly dramatic. On today’s trading day alone, the price of Bitcoin fell more than 15 percent at times. The key currency was thus listed below the $ 23,000 mark. The situation is even worse for altcoins. The cryptocurrency market cap has fallen from $ 3 trillion to less than $ 1 trillion.
But how long do we keep this capitalization going? Will BTC really fall below $ 20,000? Or can the bulls reverse the trend soon and maybe now is the perfect time to buy the swim? Kryptoszene.de assesses the current situation.
The price of Bitcoin has dropped more than 65 percent
Who would have thought a few months ago that Bitcoin would fall back into the $ 20,000 area. Just over half a year ago BTC / USD was trading at an all-time high of almost $ 70,000 in November 2021. Many analysts suddenly seemed to have predicted the $ 100,000 mark within reach.
But things turned out differently. Compared to the all-time high, it is now minus more than 65 percent. And suddenly it seems much more likely that bitcoin will cost less than $ 20,000 again soon than it will rise to $ 100,000 in the foreseeable future.
Altcoin investors, such as Ethereum buyers, felt the correction even more severe. The most valuable alternative to Bitcoin has fallen as low as $ 1,160. ETH is currently trading just over $ 1,200 again. As a reminder: a few months ago a coin cost almost 5000 dollars and reached a record 4867 dollars. ETH even recorded a 75 percent loss.
Altcoins like Solana crash 90 percent
Cardano buyers or XRP or Solana investors also have to accept significant losses. SOL even lost almost 90 percent of its value. With Cardano it’s only slightly less at 85 percent minus. There are almost no bases for significant market capitalization that could counter the current trend.
As painful as the correction is for many cryptocurrency buyers, there may also be an incredible opportunity. Because it’s extremely tempting to get an asset 80 or 90 percent cheaper than it cost a short while ago. Are these “special prices” a one-time purchase opportunity? Or will Bitcoin or Altcoins be much cheaper soon?
Bitcoin has fallen to its lowest level in about 18 months https://t.co/nmZvcj549K pic.twitter.com/QMwBfyeMsB
– Bloomberg (@business) June 13, 2022
Does history repeat itself? BTC could drop to $ 10,000
At first glance a BTC chart does not seem to give good reason to expect a trend reversal. Bitcoin is about to close the 10th out of 11 consecutive weekly candles in the red. This is unique in the history of BTC. Even in the 2017/2018 bull market, when Bitcoin first rose to just under $ 20,000 and then crashed to around $ 3,000, the price did not record so many red weekly candles at once.
However, when comparing the percentage of current bear market losses with previous cycles, a different picture emerges. From the record high in late 2017 to the low in 2018, BTC fell nearly 84 percent. And the 2013 bull market subsequently corrected 87 percent in early 2015.
If you look at these figures, the current correction appears to be improving by about 67 percent. Assuming that the price of Bitcoin falls again by about 85 percent in this bull cycle, BTC could even crash to $ 10,000. That would be less than half the current price. That sounds scary, but there are some good reasons why this horror scenario will not happen for Bitcoin buyers.
Investors like Tesla and Co Crypto 2022 market are not comparable
Regardless of technical analysis, the market structure has changed dramatically from previous bull markets. Institutional investors like carmaker Tesla have invested billions of dollars in BTC. BTC is now integrated with payment service providers such as the world – renowned PayPal provider. In addition, exciting new applications are emerging on topics such as decentralized finance or the metro. This means that the crypto market in 2022 is fundamentally different from the speculator-driven prices a few years ago.
On the other hand, current examples like the crash of the Terra (Luna) cryptocurrency and the UST stablecoin show that the crypto market remains volatile and investors still seem to be taking a higher risk than classic savings investments. Even current headlines, such as Celsius Network denying its customers access to their assets, do not necessarily contribute to the increase in trust in the crypto market.
In this market environment and other effects such as high inflation and the unstable political situation, correction does not seem impossible to continue.
Strong support between $ 22,500 and $ 20,000 for BTC
However, a look at the BTC chart shows that Bitcoin hits a strong support zone at the latest at $ 20,000, which the bears must overcome first. This is the highest rate ever from the bull market in the past. And unwritten crypto law says the actual correction ends at the latest at the high point of the previous cycle.
But the Bitcoin course may gain support sooner and a trend reversal can begin. Due to a downward correction, the Average Weekly Car 200, which describes the moving average price over the past 200 weeks, has been an important support zone for BTC.
Bitcoin has currently just tested this support, as the 200 WMA is around $ 22,500 today. If BTC had this support, a reversal of a trend could happen soon. Then investors may soon be able to look for a bullish week candle.
Bitcoin is considered oversold: buy the dip opportunity
Another indicator gives hope that the bottom could be reached without delay. The Relative Strength Index, which is considered to be one of the most reliable instruments in chart analysis to determine whether an asset is overvalued or undervalued, is currently below the 30 mark on the weekly chart for BTC. .
Bitcoin Relative Strength Index reached such a low last level in December 2018. As a reminder, this was the bottom of the bear market at the time. If Bitcoin behaves accordingly in this cycle, this would suggest that prices will rise again soon. However, this does not have to be immediately related to the next bull run. A longer consolidation period at the current level is also an option. Even then, it took another four months until April 2019 before the Bitcoin price could rise significantly.
Overall, though, there may currently be a good chance of buying Bitcoin and Altcoins cheaply. As is well known, however, there are no guarantees that the correction will end.