Cryptocurrency Analysis

[IFX_Selena]

What awaits Bitcoin next week?



The first cryptocurrency ended yesterday in positive territory. The quotes gained about $ 350, but today the fall has resumed. However, the cryptocurrency has not yet been able to go far down. In general, the correction scenario of the development of events is fully preserved. We have repeatedly said that the upward trend in recent weeks has dried up, the "bullish" mood has weakened. In the weakly updated peaks, the value of the cryptocurrency was seen. Thus, a correction was brewing.

Moreover, no asset in the world can grow constantly. In general, nothing extraordinary is happening right now. But since bitcoin has again become a hype topic over the past year, a 20% drop is perceived as if the US stock market has fallen by 20%. These are incommensurable concepts. It should be remembered that for bitcoin to pass 5-10 thousand dollars in a day is not such a rare phenomenon. Thus, at this time, the cryptocurrency is being adjusted. The question is, to what values can the decline occur and whether a new downward trend is beginning now, which will last for the next 2-3 years?

Many experts now insist that the upward trend is not broken. Most believe that even if the bitcoin price drops to the value of $ 40,000 per coin, this will not mean the end of the trend. Many believe that the market has overheated, and blind faith in the eternal growth of the cryptocurrency has played a cruel joke with many buyers of credit funds. From our point of view, bitcoin can fall to 44-40 thousand dollars per coin. So far, the current correction doesn't even look strong. The illustration below shows at least three proportional corrections. Recall that the current upward trend started at $ 4,000 per coin.

Thus, the total increase in the value of "digital gold" was 1500%. And now the price has adjusted by 20%. Therefore, a further decline in quotes is almost guaranteed, but at the levels of 35-40 thousand dollars per coin, very interesting events will develop. Recall that in the States, they want to increase the tax on capital gains for the rich to almost 50%. Thus, large investors can begin to redistribute their financial flows, and bitcoin can become the tool from which the outflow of investments will begin. Of course, this is only a guess since no one knows how people who own millions and billions of dollars will behave. However, such a scenario is possible. The main question is whether the high demand among large investors and institutions will continue if bitcoin drops to 35-40 thousand dollars per coin?

On the one hand, such levels will be very attractive for new purchases. On the other hand, bitcoin has already lost at least twice its history to 80-90% of the previous upward trend. Then there were "attractive levels" for new purchases. However, the fall almost completely covered the entire last movement.



In technical terms, the "cue ball" continues to be below the critical line and in the near future may gain a foothold below the Senkou Span B line. It is already clear that the support level of $ 50,770 will be overcome, although there has been no clear overcoming over the past two days. Thus, the chances of a further decline in bitcoin in the area of $ 43,850 remain high. Now we can talk not just about a downward correction but about a new long-term downward trend.





Paolo Greco
Analytical expert
InstaForex Group © 2007-2021