Cryptoanalyst warns: Bitcoin could fall more than half again | 6/2/22

Lately, the crypto market – and Bitcoin in particular – has been under significant pressure. But as a cryptanalyst recently pointed out in a case study, there is still no sign of a recovery: Bitcoin is likely to suffer further losses.

• Terra crash and fear of interest rates weigh on cryptocurrencies
• “Death cross” in the BTC chart suggests a correction
• Course can be halved

Bitcoin & Co. in a downward trend

Recently, the cryptocurrency market has been under considerable pressure. While the largest cyber currency weighted by market value, Bitcoin, still marked a record high of $ 68,789.63 in November 2021, the price of cryptocurrency has continued to decline since then and was last quoted at $ 29,514 (as of January 01, 2021). June 2022). The situation is the same with competitors like Ether, Ripple and Cardano.

Terra crash and fear of interest rates ruin the mood for crypto investors

One of the reasons why the digital coin market has been under stress recently is the collapse of stablecoin Terra UST. The cryptocurrency is linked to the value of the US dollar, which aims to prevent sharp price fluctuations, such as those observed with Bitcoin, Ether & Co. Terra UST is also an algorithmic stablecoin that works in conjunction with another cryptocurrency. This is the digital currency LUNA. For example, if new quantities of Terra are thrown on the market, units of LUNA must be dissolved and vice versa. So the dollar price should be modeled. But if the US dollar collapses, there will also be a sharp drop in the Terra exchange rate, which LUNA will have to compensate for. Several new LUNA tokens will then be created in a very short time – as was the case in early May. The price of LUNA suffered as a result and the token is now almost worthless. Terra blockchain has been decoupled from the US dollar as a result of the depreciation and is now out of service. With Terra 2.0, however, the developers want to eradicate the previous bugs, and the new version should start soon.

Although the fall in prices does not affect crypto-heavyweights like Bitcoin, the incident showed how quickly a total loss of value of a cyber currency can occur. Therefore, the exchange rates of other digital currencies have also given way since the LUNA crash. In addition, crypto-investors are also concerned about rising interest rates, which further amplifies the downward spiral of the crypto market.

“Death Cross” bodes ill for Bitcoin

However, the end of the road is far from being reached, it appears from the “Rekt Capital Newsletter”. In a case study shared by the publication’s author on his Twitter profile, the Bitcoin chart was previously examined for its “death cross”. The term refers to the time when the moving average for the last 50 days falls below that for the last 200 days. In the diagram image, the two lines intersect.

According to research from Rekt Capital, such deadlift cycles have occurred several times over the last ten years, which has resulted in a stronger correction. In 2013, for example, the price of bitcoin fell by about 70 percent after such a cross, followed by 65 percent in 2017 and 55 percent in 2019 after such dead crosses emerged.

Counter-movement: BTC 2020 and 2021 with a price increase despite death cross

However, there are exceptions to this rule when looking at price movements. In the chart that Rekt Capital shares, death crosses can also be seen in 2020 and 2021, but unlike previous price declines, Bitcoin actually increased in these cases.

Recovery rally unlikely

Nevertheless, these observations should in fact be exceptions, as Rekt Capital further explains. This is supported by the fact that Bitcoin has registered a large minus of about 40 percent since the beginning of the year, and so far there has been no counter-movement. The crucial thing now is how clear the correction has been since the last crossing of the 50 and 200 lines in January 2022. “So since #BTC has fallen -43% since November ’21 before the death cross … $ BTC could go a little further back to achieve an overall decline of -43% after the death cross if this historic trend continues to repeat itself, “the tweets said. In this case, a Bitcoin rate of $ 22,700 can be expected.

Historically, however, the correction could also be much more drastic: with a minus of 55 percent, the Bitcoin price would drop to around $ 18,000, while a 65 percent correction would result in a value of $ 13,800 according to the author. If the decline was even 71 percent, this would even push Bitcoin to $ 11,500.

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