Why Bitcoin Will Plunge Below $3k

Why Bitcoin Will Plunge Below $3k

Bitcoin (BTC) has climbed back above $9.4k in an aggressive move. It has become very clear now that BTC/USD intends to test the main trend line resistance for the third time just like it did in March before the brutal downtrend started. It is important to realize that the uptrend is already broken at this point. We are just waiting for the downtrend to formally begin now. The bulls have lost control but the market makers and whales are not on the side of the bears yet. In fact, they want to shake out some impatient bears before the downtrend can begin.


This liquidity hunt could end up extending all the way up to $9.7k as we have discussed in our analyses for the past few days. After the recent crash, it became less probable that BTC/USD could garner the momentum to go significantly higher than $9.7k but seeing as how many retail bears would have rushed into short positions soon as the CME Futures gap was filled around $9.5k, it makes a lot of sense that the market makers and whales would want to prey on them one last time before the downtrend can begin.

For now, the S&P 500 (SPX) is also quite bullish and it may be premature to enter short positions just yet. That being said, this is the best time to be looking for short entries. Soon as we have confirmation, the market could decline very aggressively from here and the short positions if executed properly could pay off big time. In the case of Bitcoin, we need to see it test the trend line resistance for the third time. In addition to that, we need to see it break below the rising wedge.

For additional confirmation, we need to see it close below the 200-moving average on the 4H time frame as well as the 200-exponential moving average on the 1H time frame. It is important to note that this downtrend will be far more aggressive this time and BTC/USD will be expected to decline down to the bottom of the descending broadening wedge it is trading in which could easily pull it down to $3k or lower before the end of the year.

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