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Breaking News: Bitcoin Hits ATH Of $112,000, Expert Predicts Rally Is Just Beginning
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Breaking News: Bitcoin Hits ATH Of $112,000, Expert Predicts Rally Is Just Beginning

Five Reasons Why Bitcoin Price Dropped And Could Correct Further

Tony "The Bull" Severino
Tony "The Bull" Severino
1 year ago
4 mins read

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Bitcoin price has been rallying for most of 2020, but over the last two months, the cryptocurrency’s momentum kicked into overdrive. Anything that goes up, must at some point come back down to cool off and recharge before it can do it all again.

After such a memorable push by bulls over recent weeks, the tides could soon be turning. Here are the five key factors that could cause a deeper correction, beyond the conclusion of politics or news that a vaccine is near.

The Five Reasons Why Bitcoin And Crypto Could Correct A Lot Further

As supply is absorbed by goliaths like Grayscale and corporations like MicroStrategy and Square, Inc by the thousands, even BTC miners aren’t able to produce enough new coins to keep up with demand. What has resulted, is a parabolic climb in Bitcoin, that has left even die-hard cryptocurrency supporters in disbelief.

September started with a strong, $2,000 crash to retest $10,000. The bull confirmation held, and from there the crypto asset exploded by another nearly 60% to $15,900 at the current 2020 high.

But things could soon be turning down after a blue wave, Joe Biden victory, and news that a vaccine is 90% effective. While there is no denying that the news has an impact on the market, various fundamental and technical signals, however, are predicting a deeper correction now that Bitcoin is losing its momentum.

bitcoin parabolic curve

The parabolic curve breaking could lead to revisiting $11,500 | Source: BTCUSD on TradingView.com

The parabolic curve that sustained Bitcoin throughout the entire rally, is finally about to crack. Parabola, when broken, often results in an 80% retrace of the previous impulse. This could suggest that the leading cryptocurrency by market cap could drop as much as $4,000 before continuing higher.

Wiping out 80% of the recent rally would be less than a 40% total correction for Bitcoin, which is common during bull market shakeouts.

bitcoin bearish RSI divergence

Bears could be hiding in the shadows, according to the Relative Strength Index | Source: BTCUSD on TradingView.com

Another sign that one of those signature shakeouts is near, is due to a massive hidden bearish divergence on the RSI stretching back from the 2019 peak.

The chart above demonstrates how the Relative Strength Index made a lower high, despite price making a higher high. The divergence between the two predicts a fall unless the RSI rises higher to break the divergence.

bitcoin fibs

The recent crypto rally stopped in its tracks at the 0.786 Fib retracement level | Source: BTCUSD on TradingView.com

Bitcoin interestingly chose the 0.786 Fibonacci retracement level from $20,000 to the bear market bottom as the choice area for what could be a short-term reversal.

The cryptocurrency topped out at the 0.618 level in 2019, while the 0.5 Fib level resides at roughly $11,500 – which could match up with targets related to the broken parabola above.

spot exchange inflow mean

BTC is flowing to spot exchanges showing potential profit-taking | Source: CryptoQuant

CryptoQuant’s Bitcoin “Spot Exchanges Inflow Mean” is a tool providing a visual on how much BTC is moving into exchanges. When this number rises, it signals whales and smart money are sending BTC to exchanges that are likely to be sold, causing prices to tumble.

This metric has reached the highest level since the Black Thursday crash.

crypto fear and greed index

Be fearful, when others are greedy, warned Warren Buffett | Source: Crypto Fear & Greed Index

As for why whales and smart money could be taking profit, it is actually a matter of when. Some of the best investors to ever live, advocate taking a contrarian stance.

The crypto market fear and greed index, is at the highest level in all of 2020, at a reading of “extreme greed,” or 90 on the scale. The only time since the scale’s readings began when crypto market greed was higher, was when Bitcoin topped in 2019. Is that’s what is happening again now?

Featured image from Deposit Photos, Charts from TradingView.com, CryptoQuant, and Alternative.Me
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Tony "The Bull" Severino
Tony "The Bull" Severino

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

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Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
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