As Bitcoin continues to rise at an unbelievable pace, so, too, do the anxiety levels of the crypto faithful. The world’s favorite cryptocurrency has astounded and confounded analysts at the same time during its recent rush to glory, but memories remain fresh of Crypto Winter and of a few bobbles along the road. As a result, analysts have displayed more caution in their predictions, typically adding caveats that, if certain conditions did not occur, then all bets were off on their tediously prepared projections. Lately, nearly everyone sees a major correction as necessary before BTC can run for the gold.
Analysts have long memories, most likely due to reviewing charts from days gone by to find that special insight lurking between the lines. Josh Rager, a respected crypto trader, mentioned an insight of his a while back that has stuck like glue: “If history repeats, there should be plenty of strong pullbacks on the way to the next peak ATH [All Time High]. There were at least nine 30%+ pullbacks from last cycle accumulation & uptrend.”
At least “nine 30%+ pullbacks” per Josh? How many have we had in this run up? As we reported ten days ago: “Rager also noted that in the current bull run, there has only been one 26%+ pullback, and that data point only occurred on a few exchanges, when [an] alleged price manipulation tactic was in full flower.” Suffice it to say that every analyst that buys into this way of thinking is also super sensitive about any sudden deviation to the south, for whatever reason.
You can imagine the fright last May 30thwhen, during overnight trading and only on a few exchanges, Bitcoin fell “a staggering 11% within a few hours on exchanges like Bitstamp”, bounced off of $8,000, and gradually made its way back to $8,300. It stands at $8,552 today, but other altcoins were roughed up a bit more last week, booking losses of 9% or more for the day. No one ventured a good explanation that evening for the downward spike, other than a few analysts speculating that, if BTC held above $9,000, a major run was next. Whatever the case, analysts are a wary group these days.
Another technical analyst in the crypto sector, who goes by the cryptic name of “Cred”, is not too concerned: “I think the vertical rally is more a sign of FOMO and disbelief as opposed to something to be inherently concerned about. I’m looking at the $9600 area as the next high time frame resistance area if price trades higher. Closer to current price (which is pulling back at the time of writing), I think losing $8200 — the level price broke out from and thus nearest support — will take us to the $7300 area.”
As for the probability of a 30% correction or more, Cred remains receptive and cautious: “In 2017 and years before that, Bitcoin would regularly correct circa 30% before continuing higher. I think we will see something similar, but trying to short this market presumptively is a bad play. Any significant pullback above the old $6000 floor is a dip I’m interested in buying, the closer to $6000 the better.”
When Josh Rager was contacted again, his thoughts had not changed that much: “If Bitcoin can hold and close above $8200 on the daily chart there is hope that it could continue to push up to $9400+ but I still believe that a strong correction is due. And at this time after the distribution pattern in upper $8ks, the spring above $9,000 with sharp downturn would be a clear sign to me that people have started taking profit prior to the $9400+ level. Everyone was watching $9400+ to start taking profit and because of this, the move came early and it seems that many were front run by whales.”
In line with the technical comments of these two analysts, BTC did recover above support at $8,300 and displayed its remarkable resilience once more. Due to the sensitivity of the moment, however, it appears that analysts are glued to their screens “24/7”, waiting to see if the “30%+ correction” theory pans out. In any event, the “flash crash” or whatever name you wish to attach to it has indicated that there may be a multitude of sell orders waiting just above $9,000, poised to take profits in an instant.