The most important event of 2019 which was the Litecoin (LTC) halving has finally happened. If we take a look at the daily chart for LTC/USD, we can see that it did not shoot up towards a new all-time high as the majority expected it to. In fact, the price retraced quite sharply and ended up closing not just below the 50 day EMA but the 21 day EMA. This goes on to show us what expectations mean compared to reality. The price has declined below $100 and is now eyeing further downside as the market gets closer to the beginning of a brutal downtrend. The price has closed below a key support/resistance level. This level has served alternatively as support and resistance for a long time. We have seen the price test it as support and resistance numerous times and this time it has been tested as resistance again.
If we take a look at BTC/USD, we can see that the price has run into a resistance close to $12,000. This level where the price has faced a strong resistance is the 38.2% fib extension level from the parabolic uptrend of 2015. If we draw a fib extension from the beginning of the parabolic advance in 2015 to the top of the rally in 2018, we can see that the 38.2% is where the price has faced a rejection. In addition to that, the price has printed the same fractal that it did after the parabolic advance of 2018. We have seen three tops just as we did in 2018 and this is now likely to be followed by significant further downside. If we take a look at the last drop, we can see that the price corrected more than 40% to the downside after that. We are likely to see a similar drop this time which will pull the price down to its 61.8% fib retracement level.
Drawing a fib circle from the all-time high to the point of first capitulation where the price declined below $6,000 we can see that we are now extremely close to the price breaking this fib circle. We expect it to take no longer than three days which means that this week is going to be very important for Bitcoin (BTC). When the price breaks below this circle, we expect it to fall to the next circle which means the price could end up falling to $3,000 and then eventually below it. We have a target of $1,200-$1,800 for Bitcoin (BTC)’s bottom. That is being very conservative; if we were more bearish we would have a three digit target because what is brewing in the stock market could have a trickle-down effect on the cryptocurrency markets.
If we take a look at the Fear and Greed Index, we can see that the market is back at greed as everyone is tweeting about the next bull run and Bitcoin (BTC) being a store of value or a safe haven asset that is going to the moon. We have seen in the past that it does not end well for the overly optimistic traders. Lastly, let us take a look at some useful stats on Blockchain Whisperer. We can see that the Longs to Shorts ratio for Bitcoin (BTC) is currently at 73.46% to 26.54% in favor of longs. This means that the market makers now have an opportunity to exploit these aggressive longs which will lead to a decline in the market. If we take a look at the S&P 500, it has already started its decline and is now on the verge of falling below the 200 day EMA. The last time the stock market declined like this, we saw the cryptocurrency market nosedive below $6,000. We expect the same to happen this time and this will obviously have a devastating effect on the market. Altcoins like Litecoin (LTC) and Ethereum (ETH) are going to be battered a lot more as the market begins its next downtrend.