Bitcoin has already fallen more than -22% since its mid-March high of over $73,000. While Bitcoin is currently holding above $57,000 after the recent price crash, there could be further declines ahead if history repeats itself, according to Jacob Canfield, a trading mentor at Trading Mastery. analysis Forecasts point to another potential decline in the price of Bitcoin, as it is likely to reach lows not seen since the beginning of the year.
Why Bitcoin Could Crash Another 33%
Canfield’s analysis on TradingView is based on historical patterns observed in Bitcoin price trends. “Historically, Bitcoin likes to retest its yearly opening levels,” Canfield notes. According to him, these retests can confirm bearish or bullish trends but are a constant feature of Bitcoin market behavior. Since 2017, the opening price has been retested every year within a year, with the notable exceptions of 2023 and 2024 (so far).
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“Since 2017, the annual open has been retested every year except 2023 and 2024,” Canfield noted. For example, Bitcoin’s 2018 downward retest of the open occurred just before the COVID-19 pandemic crash, and similar patterns have been observed in subsequent years. “Even the 2019 annual open at $3,850 was retested during the 2020 COVID crash,” the crypto analyst added.
Furthermore, the 2020 annual open was retested during the first three months of 2020. The 2021 open was also retested and represented the lowest point before a major rally that led to a peak of $69,000, just before the FTX collapse. “The 2022 annual open was a similar bearish retest to 2018 before the lows around $16,500. Similar to the 2021 annual open retest that gave us our bottom, this gave us our local top,” Canfield noted.
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Looking ahead, the crypto analyst speculates on a potential bottom for Bitcoin in the coming months. “This is where things get interesting. The 2023 and 2024 yearly open has yet to be retested. The question is, do we form a bottom at the 2024 yearly open before further all-time highs or do we capitulate until the 2023 yearly open at $16,500 like we did in 2019.”
Important indicators to monitor
The answer may lie in several technical indicators that Canfield considers pivotal. First, Canfield mentions the 0.618 Fibonacci retracement level. This indicator is closely aligned with the expected 2024 yearly open, suggesting a higher probability of finding support in the $38,000 to $42,000 range. Notably, a price breakdown to this low would mean another 33% drop for Bitcoin holders.
The second crucial indicator is the 200 EMA/weekly EMA band. This indicator is also converging around the 2024 open. It reinforces the possibility that this level will act as a strong support area. “This gives us a higher probability that we will form a bottom around that area and the 2023 annual open could act like the 2017 annual open and never be retested,” Canfield speculates.
Despite the bearish outlook, Canfield’s analysis leaves room for different scenarios, emphasizing the cyclical nature of Bitcoin’s market dynamics and the role of historical precedent in predicting future trends. “Either way, I think this gives us a high-probability target based on historical precedent for where we might find a local bottom,” he concludes, calling for further discussion and analysis from the community.
At the time of publishing this report, BTC was trading at $57,479.
Featured image by iStock, chart by TradingView.com