Bitcoin Can Easily Fall Below $3,000

Bitcoin Can Easily Fall Below $3,000

Bitcoin is showing bullish signs for now after the price found support on the 50 EMA on the 4H time frame having declined below the 38.2% fib extension level at $7,812. At the moment, it seems ready to shoot higher towards $8,000. It will face some resistance at $7,961 but if it breaks past that level then we can see a rally towards $8,200 in the near future. Traders need to realize at this point that the rising wedge we see on the BTC/USD chart is now very close to being broken. The balance of probabilities indicates that it will be broken to the downside leading to further downside in Bitcoin (BTC) and the rest of the cryptocurrency market. 

We can see on the 4H chart for Bitcoin dominance (BTC.D) that it has declined below the 70% level but the 69.74% level is a very strong support which is unlikely to be broken anytime soon. A rising Bitcoin dominance spells trouble for the overall market. Even if it means that BTC/USD will keep on pumping higher, it means altcoins would lose ground against Bitcoin. At this time, after we see a rise in Bitcoin to $8,200, we could see some sideways movement in Bitcoin dominance during which times altcoins may rally further. However, the 72.09% level is what we need to watch. If Bitcoin dominance shoots past this level, it would be the end of any near-term hope of a reversal and the beginning of a major capitulation phase. 

Altcoin dominance (Others.D) is at a critical juncture. If we see a decline below the 200-day moving average like last time, we could see altcoins get battered extremely hard. Something like that is expected to happen before the next halving as traders have become far too comfortable expecting a rally before the upcoming halving. Everyone seems so sure that Bitcoin will reach a new all-time high and there is no way it could decline below $3,000. This is what a lot of traders thought about $6,000 too until it happened. 

This time, the circumstances are a lot different and if the 20+ Years US Treasury Bond (TLT) or the EUR/USD forex pair were to enter a downtrend, we would expect the cryptocurrency market to be hit the hardest. We have historically seen a correlation between Bitcoin and these two traditional markets. A decline in either of these pairs could be the beginning of another major downtrend which would trigger a sharp decline in the cryptocurrency market. It is alarming how the price of Bitcoin has come so close to the 200-week moving average again so soon after the recent parabolic run up. This could be an indicator that Bitcoin may enter the next halving with a bear trend and could see a decline well below $3,000 when it capitulates to find a potential bottom somewhere between $1,200 to $1,800 in the weeks and months ahead. 

 

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