Bitcoin (BTC) is once again on the verge of its deadliest crash in months. We were this close to such a decline once before but the circumstances were different back then because the majority of retail traders were not bullish. A lot of them were fearful and some were bearish. However, this time the situation is entirely different as the recent parabolic advance has made a lot of traders overly optimistic. There is a high probability that a retracement to the mid $8,000s will be seen by the market as a healthy pullback and a precursor to a major rally to the upside. If we take a look at the 4H chart for BTC/USD, we can see that no one is talking about this descending triangle.
Some analysts have gone as far to point to the possibility of a golden cross on the D3 time frame but no one is talking about this. Now, you do not have to agree with me that this descending triangle will break to the downside even though that is the case majority of the time and this time it makes sense for that to happen, but you could just acknowledge that when the majority is talking about the same thing, it rarely happens. A lot of analysts are expecting the price to fly towards $13,000 after the fall to $8,500. I do believe that we might see a strong rally to the upside after the price declines to mid $8,000s because the market makers need to convince retail traders that the bullish cycle has actually begun. This is the only way they can trap the bulls so they are left holding their bags while the whales dump on them. This has happened over and over again in this bear market but people make the same mistakes over and over again.
If we take a look at the EUR/USD pair, we can see that the descending triangle seen on the weekly chart is on the verge of a major decline. However, there is still room for a rally to the upside. This is the gap that we need to watch out for. While BTC/USD might still decline to mid $8,000s, if the EUR/USD pair climbs towards the trend line resistance again, then a similar move in Bitcoin (BTC) could be expected, but needless to say the long term outlook remains unchanged.
It is quite interesting that the EUR/USD and EUR/GBP are both at turning points. The former will influence the price of Bitcoin (BTC) more as Bitcoin (BTC) is predominantly paired to the US Dollar (USD) on the majority of exchanges. It is pertinent to note that EUR/USD is trading below the 61.8% fib extension level at the moment which means it may not be a good idea to count on significant further upside here. A fall below the descending triangle will have important implications not just for Bitcoin (BTC) but for other major markets around the globe.