It is news to no one that crypto got smacked the past 48 hours. The real question is what does the next few week look like, which will be most telling for how the rest of the year plays out.
That 30K Level, you are now the savior…
Looking at the chart above you can see the support line in that 30K area, give or take a few hundred points.
That is where bitcoin bounced after a precipitous drop, which marks a great test of that level. However, is it just that, a bounce? Or as they call it in in technical analysis – a dead cat bounce.
Only time will tell us the answer to that, there are a thousands reasons for this drop, with leveraged traders getting liquidated being one of them. The reasons I don’t really care about in this post.
I’m more concerned with focusing on potential price levels both up and down, and how bitcoin basically did a full round trip of the entire 2021 move.
Damn those round trips
A couple years back you would here me talk about “round trips” on my scaredy cat investor show (which I’ve since gone on indefinite hiatus from) referring to the 2018 top and the subsequent fall.
When first mentioned, coins had not made a full round trip from start to top, back to where they started.
They hit many key levels on the way down, one after another, but eventually after some time ended up back where they started before the parabolic move of late 2017 into 2018.
Now, I’m not saying we will see that here, but when looking at the chart above we do see bitcoin has completed phase 1 of a round trip. Erasing the big move that happened in the first quarter of 2021 for the most part.
Phase 2 would be a drop to the next support level of 22,500. This would wipe out the prior explosive move we saw in late December and into January 2021.
Phase 3 would be dropping to the 17-18K level which would then complete a full round trip, wiping out the entire bull run that occurred over the last six months.
Happened once, doesn’t mean it will happen again, but it could…
There are a thousand reasons while this time is different. And I agree with most of them, but there is something you have heard me say many times…
Some of it is speculative while most of it is being staked to earn yield.
So with that said, I am keeping an open mind. The 30K level is all I am paying attention to for the next few weeks.
Staying above that will be a huge win for the bulls, if not then the bears are in control for the near-term.
Maybe we never even see 30K again, maybe we see 18K. In the end, anything can happen and nothing has to happen.