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Bitcoin price collapsed before fear of Covid-19 but will BTC drop to $ 2,000?

The cryptocurrency market is bleak, Bitcoin price is holding at $ 8,000

Bitcoin (BTC) has had the most unforgettable week in history, seeing prices drop 52% ​​after only 24 hours this week. This is one of the biggest collapses since the birth of the king coin.

This week, not only was Bitcoin affected, but the stock market also recorded the worst week since 2008, other safe-haven assets such as gold and silver were not out of the fierce sell-off trend. paralysis. Cash is king, meanwhile, is ideal in the current context. However, will the assets continue to decline, or is the current outlook temporary?

Daily crypto market performance. Source: Coin360
Daily crypto market performance. Source: Coin360

Bitcoin has dropped to $ 3,750 and bounced to $ 2,000 since then

The volatility of all markets soared this week, when VIX (Volatility Index in the US) reached an unprecedented level since Bitcoin launched. Similarly, Bitcoin witnessed a dump from $ 7,500 to $ 3,750, after which the price soared $ 2,000 to $ 5,750 within the next 24 hours.

Daily chart of BTC / USDT. Source: TradingView
Daily chart of BTC / USDT. Source: TradingView

The daily chart is showing a sell-off from the previous week. It also shows the levels the market should keep in mind for the next period. The above major resistances we see are $ 6,400 and $ 6,800-6,900 USD.

Those levels are quite far away from the current price. A sharp decline in short time usually causes support levels to be far apart. On the contrary, it also happens with large price increases in a short time. An example is a rally from $ 3,100 to $ 14,000. The entire rally was $ 1,000 an hour, which created large gaps on the chart.

However, the major resistances are $ 6,400 and $ 6,800- $ 6,900. Similarly, the support levels to watch for are $ 4,800 (because Bitcoin prices have bounced from this weekly level), $ 4,250 and $ 3,700 are the next support levels.

Currently, the price of Bitcoin is attempting to capture $ 5,250 as support. This level will provide the basis for BTC to continue testing the above levels, such as $ 6,400.

The crypto fear & greed index is showing extreme fear

Crypto fear & greed indicator. Source:
Crypto fear & greed indicator. Source:

Greed and fear index of cryptocurrencies (crypto fear & greed index) gave a true perspective on the current market sentiment. The index is currently valued at 8 on a 100-point scale, a level showing investors are terrified of fear. The figure is very noticeable, since the last time the index was so low was in November 2018 – the moment Bitcoin price hit $ 3,100 or the February 2018 crash – when Bitcoin dropped to $ 6,000.

In particular, the stock's fear & greed index is at 1, which means that investors no longer have confidence. However, the stock market has seen a sell-off of up to 30% in the past 10 days, an unprecedented decline, even worse than in 2008 and 1929.

Does this mean we will see further declines? Well, it seems that the expectation of further reductions is not surprising given that many countries have decided to block corona virus.

But organizations and governments are launching bailouts for the economy. One of them is US President Donald Trump yesterday. This move caused the US stock market to rebound 8% in 30 minutes, while Bitcoin also increased from $ 4,800 to $ 5,600 at this time.

But another potential slump may occur when entire global economies are sucked into the corona virus. However, the impact from that will usually come after some time – will take place at the end of the year. In the short term, fear and panic may reach its peak when many anticipate more blockades.

Are we in any situation of the stock market? Perhaps the so-called “bull trap” or “bull trap” is shown in the Wall Street Cheat Sheet below.

Wall Street bubble pattern
Wall Street bubble pattern

The bubble model is inherently popular among cryptocurrency investors, as they have experienced it over the years. After the first mass sell-off, there is usually a calm upturn, where everyone expects things to be good and stabilize.

Such a period can also occur in the stock market in the coming months, as Western countries will take measures to prevent the virus, which can reduce panic. However, the real economic impact will only appear at the end of this year, then it will trigger further declines as shown in the chart.

What will come next with Bitcoin?

It is not unreasonable to expect a further decline for Bitcoin, as BTC is known to be one of the first risky and sold assets. People need cash on hand instead of volatile digital tokens.

However, much of fear and panic can affect prices. The history of Bitcoin shows that the currency has repeatedly decreased by 80%, after that the price stabilized and slowly increased. A similar situation may occur at this time. From a technical point of view, a very important indicator to watch out for is the 200-week moving average, as it is an important indicator in a bull / bear market on both stock and Bitcoin markets.

Weekly chart of BTC / USD. Source: TradingView
Weekly chart of BTC / USD. Source: TradingView

Weekly chart is showing MA-200 weeks. In 2015, a huge drop below MA-200 also happened, after that the price bounced back and kept this level.

It is important to monitor this index and see how prices will close in the coming weeks. As long as the MA-200 holds, the market may bottom out.

A short-term relief rally to $ 6,100 is possible

30-minute chart of BTC / USD. Source: TradingView
30-minute chart of BTC / USD. Source: TradingView

The short-term view is showing a clear range through which Bitcoin is moving to the resistance of $ 5,600 to $ 5,750. Support levels are found at $ 4,900 to $ 5,100.

As long as lower levels remain supportive, it is likely to keep going up and testing the above levels. Such a push up could make the $ 6,100 level become a relief rally and retest the bearish.

However, Bitcoin has not yet broken out of the danger zone. It may have bottomed out, but a break below $ 4,800 could result in a further decline and retest the low of $ 3,750.

If you are trading on the market right now, you should be aware of the risks involved in volatile times and use reasonable capital management.

Disclaimer: This article is an analysis by cryptocurrency analyst Michaël van de Poppe – a regular contributor to CoinTelegraph. Readers should only consult, do not consider this as an investment advice, especially from Toiyeubitcoin, we will not be responsible for your investment.

Readers can update BTC rates and more than 2,000+ cryptocurrencies in real time here.

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According to CoinTelegraph
Translated by ToiYeuBitcoin

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