You’ve likely heard the term “echo bubble” tossed about in relation to Bitcoin over the past couple of months. For instance, hedge fund manager Mark Dow, an investor that shorted BTC when it traded at $20,000 in December 2017, recently quipped that the leading crypto is in a “textbook echo bubble.” This came shortly after he quipped in an earlier tweet that Bitcoin will die a “grinding death, punctuated by spoofs and FOMO spasms of decreasing frequency and intensity.”
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If the echo bubble narrative — which states that BTC’s price performance this year was just an echo of, a throwback to the 2016-2018 bubble — is accurate, the cryptocurrency still has the potential to fall much further from current prices.
Bitcoin Could Fall 40%, Analyst Warns
There’s no doubt that Bitcoin’s price performance in 2019 is reminiscent of 2017 and 2018: the price of the leading cryptocurrency went parabolic from low levels to form a peak above $10,000, then formed a massive descending triangle pattern that bottomed in the $6,000 range.
Analyst CryptoHamster recently touched on these similarities, remarking that if BTC follows the path of the previous cycle, and breaks down from the low-$6,000s, it will bottom at $4,320 — just over 40% lower than current prices. (The $4,320 target was determined by scaling the previous cycle to the current, using the $6,000 level as the base for the calculation.)
— CryptoHamster (@CryptoHamsterIO) December 20, 2019
The call for a strong retracement to $4,300 corroborates bearish analyses by a number of traders.
Per previous reports from NewsBTC, Trader “FizeekMoney” recently noted that the daily on-balance volume chart for the BTC-to-USDT chart on Binance is “screaming [that] capitulation is on the horizon” for Bitcoin.
There’s also Jacob Canfield, a professional cryptocurrency trader who said that Bitcoin is not yet near a macro bottom in his eyes. He remarked that the cryptocurrency is likely to see a 20% drawdown from the current level of $6,900 to $5,500, for there is where the 0.786 Fibonacci Retracement of the rally from $3,100 to $14,000 lies.
Bullish Reversal from Here?
Although the aforementioned analyst’s observation implies BTC has further to drop before it finds an ultimate bottom, there are signs that a bullish reversal is forming right now.
Thomas Thornton, a hedge fund services specialist and market analyst, recently made the observation that Bitcoin’s chart on Bloomberg recently printed a “buy 13” candle, according to the TD Sequential Combo indicator.
These candles, the TD Sequential suggests, are indicative of impending price reversals. That’s not to mention that such candle formations were seen when Bitcoin hit $20,000 in December 2017 and when BTC cratered to $3,150 on December 14th last year.
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