Why The Next Bitcoin Crash Could Be Moments Away

The Set Up

While everyone has become rather frustrated in regard to the Bitcoin price, there is another element of this story that may not necessarily be that obvious, especially to those who do not understand or practice TA. What has been perceived as “boring” and frustrating is actually turning out to be the formulation of “weakness”. As I mentioned in a recent article, the $19K to $20K level is beginning to wear thin. The more often you return to a level of support, the more validation it receives as “meaningful support”. Unfortunately, it is a bit of a two-edged sword, as it simultaneously becomes weaker. When looking at the charts, you will also be able to note that the range has become compressed. Bitcoin has been trading in a tight range for a few months now, and I believe is moments away from a significant move.

Image Source – Binance.com

As you can see in the chart above, the range is extremely tight. Furthermore, BTC is currently trading at the bottom of the range. It is not likely that the price action moves higher, so as to “escape” this range. In other words, if it were to move higher, it is likely to simply be rejected, once again. It is also important to note that the volume has been absolutely surging while the price has been falling from the $25K mark. As I have pointed out previously, volume moves and sustains “moves” in the market. The volume is telling us that the current bias is bearish, despite many expecting October to be bullish. On that point, I definitely wouldn’t eliminate bullish price action in October. However, I personally believe that it is a case of “down then up”.

Quite Similar

Interestingly enough, we had a very similar “formation” in the previous bear market. Looking at the chart below we are able to identify a very similar pattern. Just prior to the final capitulation event was a very similar period of “tight trade”.

Image Source – Binance.com

As mentioned previously, traders and investors become frustrated during these periods. The constant disappointment of each and every failed attempt to breakout causes them to eventually sit on their hands. Eventually, they simply remove their buy orders. Many leave Crypto altogether. The immediate result of these decisions removes the “support” that has continuously held Bitcoin, in this particular instance, at $19K/$20K. Ultimately, a strong collapse becomes inevitable. This is pretty much how I see this playing out and confirms my worst-case target of $12K to $13K. However, with the chances of such a heavy correction, it is quite likely that BTC hits the $10K level momentarily.

There is always the scenario where something amazingly bullish comes out of nowhere, but realistically, as traders, we can only work with what we know. Basing an expectation on an “event” that has no probability of occurring would be rather naive. Anyway, that’s how I see things at the moment. There is also a fair amount of confluence for this outcome. Time will tell. See you next time!

Leave a Reply

%d bloggers like this: