Why Bitcoin (BTC) Can Fall Below $3,000

Why Bitcoin (BTC) Can Fall Below $3,000

Bitcoin continues to trade above $7,000 for now despite the recent bearishness in the market. Investors are still wondering where the floor is. We have seen the price crash massively in the past few days but any bullish reversal has yet to be seen. The price is trading at the bottom of a descending channel that was briefly breached but the price soon bounced back above the trend line support. Now that BTC/USD has closed below the 100 Week EMA, there is a risk of the price declining below the descending channel without seeing any significant upside short term. 

The next decline would see the price fall to the 61.8% fib extension level around $5.5k. This means that the price would be falling within a new descending channel. If it ends up breaking below the 200 Week EMA, then the probability of the price trading within this channel would increase drastically. This means that we might see the price bottom somewhere between $1,200 and $3,000 during the next decline. The ETH/USD chart shows the price at risk of further downside as it remains vulnerable despite a strong bounce off a recent low. The trend remains bearish and any near term upside or a dead cat bounce would be an opportunity to sell or short sell and not buy. If Bitcoin (BTC) ends up declining below $3,000 during the next downtrend it will have some serious implications for the altcoin market. Many overhyped coins would be at risk of losing most of their value. 

The Volatility Index (VIX) indicates that Bitcoin (BTC) might be on the verge of making its next big move soon. Meanwhile, the Fear and Greed Index remains in the “extreme fear” territory. We could see the price of Bitcoin (BTC) decline once more to form a double bottom. Ethereum dominance (ETH.D) is struggling to break past the 38.2% fib extension level while Bitcoin Dominance (BTC.D) has still not tested the 200 EMA. Short term bullishness from here on out would be within the realm of possibilities but the downtrend remains intact on the big picture and this correction is far from over just yet.

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