- The crypto market is hovering around $1 trillion in valuation following Friday’s crash
- A slight recovery over the weekend hasn’t bred much faith
- Bitcoin needs to retake $23,000 for bulls to have much hope
The crypto market is stuck under a $1 trillion valuation following a 15% crash on Friday. Bitcoin is wavering at the $21,500 mark as Ethereum tries to regroup after a rejection at $2,000, leaving the market in limbo and in a potentially perilous position. What are the potential outcomes of the current situation and what should you look out for? Let’s find out.
Market Rebound Hits the Buffers
The total market cap saw its first rejection on Friday since bouncing 54% from the June lows, and it was a severe one:
Such a rejection is typical in a bear market and is something we saw in February 2018 after the all time highs:
If history repeats itself, then this is what we could be about to look forward to over the coming months:
So is there any chance we can avoid a similar fate? The Bitcoin chart doesn’t give us a great deal of hope, with Friday’s price drop taking us back under the crucial 200-day Moving Average:
As history shows, Bitcoin needs to stay above this consistently to have any chance of kicking off a bull run. Ethereum doesn’t offer us much more comfort, despite the narrative of the upcoming merge, with a rejection which mirrors that of the total market cap:
Bitcoin Needs to Retake $23,000
For guidance as to what we need to see happen next to have any chance of hope, we can look closer at the Bitcoin chart:
We can clearly see the support line that Bitcoin has found at around $20,700, and this line needs to hold to have any hope of further upward momentum. The next crucial step is to retake and hold that $23,000 barrier for an extended period, like this:
If $20,700 cannot hold then all eyes will be on the $19,000 support. The worst case scenario is something like this:
Those waiting in the wings to buy Bitcoin will (or should) be snapping the hands of sellers to buy at this price, but of course if it gets down there fear may well prevent them from doing so. Holders will hope this doesn’t come to pass, but with a difficult few months and years ahead for the world economy, no one would be against this for risk-on assets like crypto.
