Bitcoin (BTC) is on the verge of its deadliest downtrend since the beginning of the year. We expect the price to crash hard before the end of the week. The leading factor that leads us to believe that this crash is going to occur before the end of the week is the fib circles on the daily chart for BTC/USD. We have seen the price run into the 38.2% fib extension level from the beginning of the parabolic uptrend. The price shot up past that level to shake out bears with tight stops. Now it has retraced below that level and is extremely close to breaking a critical fib circle to the downside. All of this will take three days at most but it could happen a lot sooner. This crash will pull the price down to the 61.8% fib extension level from the beginning of the parabolic uptrend to the all-time high (2015-2018).
NVT indicator on the daily chart for BTC/USD has been flashing sell signals on and off but it has now declined below its RMA. If it faces a rejection here as we expect it to, we are likely to see the price crash hard from here onwards. Please bear in mind that the fib circle could also be broken to the upside but the portability of that happening is very low and there is no incentive to anyone except overly optimistic bulls if that were to happen. This whole game is about the smart money preying on the dumb money. The Longs vs. Shorts ratio for Bitcoin (BTC) is 73% to 27% at the time of writing. This tells us that the market makers have a huge incentive to shake out these overly optimistic especially when the conditions are ripe for it. If they don’t do this, they would be letting these overly optimistic bulls win and that is not how a casino operates.
If we take a look at this chart for Bitcoin dominance (BTC.D), we can see that Bitcoin dominance (BTC.D) has now broken past the 200 Week EMA as it has breached the ascending triangle to the upside. The only reason this has happened is because the market is preparing for further downside. If we were in a bullish cycle, confidence in altcoins would not be so low and Bitcoin dominance would not be rising in this manner. This is very important because this is not just Bitcoin dominance rising, it is Bitcoin dominance breaching a very important resistance which is the 200 Week EMA.
If Bitcoin dominance closes the week above the 200 Week EMA, that will be game over for altcoins. We expect this to happen because Bitcoin (BTC) holds its ground better than most altcoins when the market crashes. So, if the market were to crash before the end of the week as we expect it to, Bitcoin dominance (BTC.D) is likely to rise further to embark upon its new uptrend. This uptrend is going to last for as long as the market inflicts maximum pain on altcoins. That will be the time when we see some of these “blockchain companies” go belly up. Recent rallies have proved that there is still too much optimism in the market and we are not likely to see a new bullish cycle until that optimism dies down.