Worst Case Scenario for Bitcoin

Worst Case Scenario for Bitcoin

Over the past day, BTC/USD has been adding 4.9%, trading just above $51K. The fear and greed index has increased 9 points to 25 in a day, and this is still a zone of extreme fear. Apparently, on Monday, along with an increase in risk appetite, buyers’ interest in cryptocurrencies returned to global markets.

Bitcoin received support on the decline to the 200-day average Bitcoin received support on the decline to the 200-day average

The RSI index on the charts of daily candles retreated from levels below 30, leaving behind oversold areas. It seems that the price has found support for buyers around the 200-day moving average. For many participants, this is a significant signal that the market as a whole remains in a long-term bullish phase.

However, so far we see very cautious purchases, and this raises doubts. The best signal would be a sharp buyback from the recession to this line, as it was in July and October, and before that – in April 2020.

So far, we are witnessing the implementation of a very optimistic scenario for bitcoin, in which it receives steady support from bulls that prevent it from falling into an uncontrolled fall.

The pessimistic scenario for bitcoin, followed by the entire cryptocurrency market, is based on the assumption that bullish/bearish sentiment is tied to 4-year halving cycles. The two previous bearish waves came in 2014 and 2018, thoroughly shaking out speculators from this train and leaving only the most stable crypto enthusiasts.

The bear market for bitcoin was in 2014 and 2018. In 2022?The bear market for bitcoin was in 2014 and 2018. In 2022?

A sharp reversal to the decline after a dizzying growth occurred at the end of 2013 and 2017 and lasted for about a year. The conclusion about the high risks of a reversal at the end of 2021 suggests itself. From peak to bottom in 2013-2014, BTC lost more than 70%, and in 2017-2018 it remained without 85%.

The repetition of such scales sets up a rollback of the BTC / USD rate in the range of 10-20 thousand. In our opinion, now even a decline to the highs of the previous cycle at $20K looks like an extremely pessimistic scenario. However, it may well be realized under negative circumstances, although it will certainly attract the interest of long-term buyers.

To implement this scenario, bitcoin must pass several control points. The first of these is the 200-day moving average passing at $48K. We will receive a more accurate confirmation after the decline to the level of the previous local lows at $ 40K.

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