Over the past week, Bitcoin (BTC) has started to show signs of weakness after a 40% uptrend in a month. Since establishing a $9,200 multi-month around seven days ago, the price of the leading digital asset has plummeted by 11% to $8,200, where it trades as of the time of writing this.
Although the price drop has seemingly found a local bottom, with the selling pressure abating, an eerie fractal proposed by a top Bitcoin analyst says it’s only a matter of time before BTC falls dozens of percent from here. Ouch.
Bitcoin Could Soon Plunge Dozens of Percent
Over the past few weeks, Bitcoin has broken out from key downtrends, rallying by dozens of percent since the $6,400 bottom registered in December of last year.
Although this has been decisively bullish price action, countless analysts have noted that the breakout we are seeing is eerily reminiscent of the infamous “China Pump” in October 2019, when President Xi Jinping’s endorsement of blockchain sent Bitcoin 40% higher. 40% higher in a day.
Similarities were seen in a number of indicators, in the directionality of the move, and how the price action was formed.
And according to a recent analysis by Cold Blooded Shiller — a full-time crypto trader — the similarities go even further than that, suggesting that BTC may tumble by dozens of percent from here.
He noted in the tweet above that when Bitcoin started to unwind after the China pump of yesteryear, the price hastily bounced off the 200-day exponential moving average (EMA) then was rejected from a key support/”supply” level, to only plunge through the same moving average.
This ping-ponging in the price of BTC last year preceded a strong crash from $8,700 to $6,400 in a few weeks’ time, marking a drop of 27%.
This is relevant because Bitcoin has done the exact same thing, bouncing off the 200 EMA almost exactly as it did last year. Not to mention, the shape of the charts are looking near-identical, suggesting that should the fractal play out in full, BTC will soon plunge by over 20% towards the $6,000s once again.
Will Bulls Step In?
Despite these fears, there are some holding onto the belief that Bitcoin bulls will step in, especially as the halving approaches.
Murad Mahmudov, CIO of Bitcoin fund Adaptive Capital, recently observed on Twitter that there is nearly no way BTC is falling much further than it already has, because “as crazy as it sounds, the -53 percent drop from $13,888 to $6,410 wasn’t a full out bitcoin bear market, but rather, unironically just mid-bull cycle correction.”
Also, the Lucid SAR indicator, just printed a bullish signal on a medium-term basis; the indicator printed its first buy signal since March 2019, which was prior to a 330% rally that brought BTC above $10,000 and crypto assets dozens of percent higher.