16. Mai 2021

Bitcoin price correction towards $20,000 likely with 100% hit rate according to indicator

The Bitcoin (BTC) price has fallen sharply and is recording big losses. The Bitcoin price has been losing value rapidly. This is also known as a BTC dump. The image shows a crumbling Bitcoin price on a descending price graph.
The current price crash could be part of a larger correction. This is Immediate Bitcoin supported by an indicator that has predicted major corrections and tops in the Bitcoin price with a 100% hit rate so far.

There is an indicator that suggests that the Bitcoin price is in the midst of a major market correction. This indicator has had a hit rate of 100% so far. This sounds impressive, but considering the fact that we only have 6 such signals to fall back on, it should of course not be overestimated. Moreover, Bitcoin is a very young and still developing market, so indicators from the past are not necessarily valid for the present or the future.

We are talking about the RSI indicator for the Bitcoin price on a weekly basis.

Every time the Bitcoin price reached or even exceeded the critical level of „90“ on the RSI indicator on the weekly chart, thus signalling a strongly overbought BTC, a major correction between -40% and -93% followed.

So let’s take a closer look.

Disclaimer: This analysis was posted on the Telegram channel of Bitcoin-Bude on 24/01/2020 and is based solely on the work of the analysts there. Of course, neither this nor any other article on cryptomonday.de constitutes investment advice.

The „bearish“ scenario for the Bitcoin price
When we talk about the Bitcoin price and its long-term development, we often talk about 4-year cycles. Each of these cycles ends with a Bitcoin halving, which initiates the next cycle. Accordingly, we have had three such cycles so far and are currently in the fourth cycle after the 3rd halving in May 2020.

Chart with the Bitcoin price in its 4-year cycles

It is striking that each cycle so far has produced two such signals. The first one marked a major correction in the midst of a too euphoric market and the second one the end of the bull trend and thus the beginning of the next bear market. Currently, we have the 1st signal in the RSI indicator in the fourth cycle.

But what does that mean exactly?

Price drop of BTC part of a 50% correction?
The first such signals of each cycle are much shorter in time. To be more precise, they have so far lasted between 5 and 12 weeks and resulted in -40 to -75% corrections. Some may think that with such numbers one can no longer speak of a correction, but we use this term because these downward movements were short-term and they were followed by a continuation of the previous uptrend.

Each of these corrections led the Bitcoin price back to the 25 MA line on the weekly chart. Currently, this trendline is at just under $17,800. The longer this correction continues, the further up the 25 MA line will move.

If this pattern continues, a return to the support level of $20,000 would be a possible scenario. This would correspond to about a 50% correction to the previous high at $42,000 and would thus fit very well within the framework of previous corrections.

The good news is that bearish was deliberately put in inverted commas in the first headline. If this indicator proves to be true, it also means that the Bitcoin price has a much higher all-time high ahead of it.