Can Bitcoin crash? Yes – but not below $36,000: Forex analyst
A recent price explosion in the bitcoin market has pushed its cost to over $52,000 per token – more than double its December 2020 low. The cryptocurrency’s meteoric rise has also sent its momentum indicators into overbought territory, which typically points to a downward correction in the medium term. However, Bitcoin is on the verge of a parabolic move.
However, Carl Runefelt, the popular crypto YouTuber, believes that the BTC/USD price could plummet by as much as 50 percent from its current level. Kevin Svenson, another market analyst, commented that a correction of Bitcoin Evolution more than 50 percent would lead to a broader downward movement that would eventually end Bitcoin’s current bull cycle.
Nonetheless, both analysts agreed that the cryptocurrency risks a massive downward move, even if it comes after the peak (around the $70,000 mark) has been reached.
„Could bitcoin reach $70,000 and then revert to $42,000 to $50,000? Yes, that would be healthy,“ Svenson said in a tweet.
Bitcoin’s lowest limit
Dave Hunter, founder of FX Hunter Wealth – a trading education platform – claims that a downward correction would not be able to push Bitcoin below $36,000.
In a note published on TradingView.com, the forex analyst highlighted higher accumulation near the said price level by the richest 100 bitcoin wallet holders. He cites evidence from December 2018, when bitcoin’s plunge near $3,100 coincided with a spike in BTC deposits in top wallets.
It happened again in March 2020 – when BTC/USD plunged to $3,858 – proving that collapses attract accumulators at a higher rate.
„The same thing is happening now in February 2021 with an average price around $36,000,“ Hunter said. „That’s [the] new institutional support. And, based on order flow, I don’t think the price will go below that level in this bullish cycle.“
Greater bitcoin acceptance
The analogy is supported by a surge in corporate investment into the $30,000-$40,000 range.
US carmaker Tesla revealed in its filings with the Securities and Exchange Commission (SEC) that it bought $1.5 billion worth of Bitcoin in January. In the same month, MicroStrategy, a publicly traded software intelligence company, also added $10 million worth of BTC to its balance sheets, at an average price of $33,810 per token.
„I can’t imagine Musk, Saylor and GBTC buying that much,“ comments Andrew Matthews, director at UK-based Niche Tax Solutions.
„How will supply significantly exceed demand in 2021? Without a coordinated ban by several major governments, I can’t even see a 60-80% drop after this bitcoin bull cycle. Time will tell.“
Bitcoin was trading at $52,700 at the time of this writing.