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Parabolic Bitcoin Indicator Points To Dangerous Collapse To Below $20K

Tony Spilotro by Tony Spilotro
11 months ago
in BTC
Reading Time: 3 mins read
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Bitcoin price is in a downtrend, after spending nearly a full year in a parabolic uptrend. An indicator bearing the “parabolic” name on monthly timeframes has given a signal, that according to past instances, has always resulted in a catastrophic fall in the top cryptocurrency by market cap.

Even if the resulting selloff ends up being the weakest ever following such a signal, it still could put Bitcoin at risk of a plunge to below $20,000 per coin. Here’s why.

Remembering The Now Broken Bitcoin Uptrend Through Now

2020 was the perfect storm for Bitcoin and the rest of crypto. Talk of inflation, a supply shock, and nations in turmoil caused investors to flock with the scarce and innovative emerging assets.

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Institutions, hedge funds, and even corporations began to pay attention to Bitcoin, and the greater crypto market began to boom due to Ethereum, DeFi, NFTs, and Dogecoin.

Related Reading | Bitcoin Bulls Bring Out Hammer Of Thor Reversal, But Support Must Hold

More big names have been drawn to the space than ever before, and Bitcoin is now in the portfolios of the wealthy around the world. The scramble to buy BTC before everyone else sent the price per coin on a parabolic uptrend, and took it from under $4,000 to more than $65,000.

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All the attention helped take Coinbase public, but since then Bitcoin and the rest of crypto has been in a downtrend, and it could get a lot worse now that the parabola has been broken.

bitcoin parabolic sar

The Parabolic SAR hasn't been hit many times in Bitcoin's history | Source: BTCUSD on TradingView.com

Why The Parabolic SAR Could Be Warning Of Further Crypto Collapse

When Bitcoin price broke its parabolic advance in early 2018, iconic trader Peter Brandt famously called for an 80% correction, give or take a few percentage points on either side. A year later the leading cryptocurrency by market cap plummeted to its bear market bottom for a full 84% retracement.

A tool that can help tell traders when an asset has gone parabolic, and through that tool where to place stop losses, could be signaling that Bitcoin will drop a lot more now that again parabola has been broken – possibly as much as Brandt called for in the past.

Related Reading | The Missing Ingredient From A Full On Bitcoin Reversal

The technical analysis tool, called the Parabolic SAR can indicate when a trend has “stopped and reversed.” The recent selloff touched the Parabolic SAR on monthly timeframes, and in the past each time that happened, BTC dropped by 72% or more against the dollar. At the highest point the post-SAR plunge reached a staggering 86% – not far from the statistics shared by Brandt.

With the tool triggered, even at the lowest ever drop in history percentage wise, Bitcoin is still at risk of dropping below $20,000 or even lower. At even 84%, which we now know happens when parabola is broken, it could take the top crypto asset back to around $10,000.

Traders use the Parabolic SAR to move their stop losses up in profit, so the only hope left for bulls is that this level was hunted on purpose. The fall happened to coincide with the yearly open, so there are plenty of technical reasons for the target also.

Featured image from iStockPhotos, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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