Bitcoin’s recent meltdown did significant damage to its market structure, also leading most major altcoins to plummet to fresh multi-year lows. Although the market has largely rebounded from its recent lows, the backdrop of global bearishness seems to suggest further losses could be imminent.
This intense bearishness has also led investor sentiment to plummet alongside Bitcoin’s price, with the fear and greed index showing that investors are currently as fearful as they were during previous bottoms.
Although this doesn’t necessarily mean that Bitcoin has bottomed, history does seem to suggest that the crypto could see some further upside from here.
Bitcoin Enters Bout of Consolidation Following Recent Meltdown
At the time of writing, Bitcoin is trading down just under 2% at its current price of $5,400, which marks a notable decline from its multi-day highs of $8,000 that were set just prior to its capitulatory selloff.
The rapid decline seen late this past week that sent Bitcoin reeling from these highs to lows within the mid-$3,000 region came about in tandem with a massive decline seen in the equities market.
This downtrend was further perpetuated by a torrent of liquidations on BitMEX, which made it incredibly difficult for bulls to defend against the intense selling pressure.
It now appears that Bitcoin is entering a consolidation phase between $5,000 and $5,800, as these are the two levels it has been trading within in the time following its recent bout of volatility.
BTC Investors’ Fear Suggests the Bottom is Close
One factor to keep in mind while trying to determine whether or not Bitcoin’s recent lows will mark a long-term bottom is the fact that investors’ fear is currently at levels typically seen when the market establishes a bottom.
Micahël van de Poppe – a prominent cryptocurrency analyst and former full-time trader at the Amsterdam Stock Exchange – spoke about this factor in a recent tweet, noting that the last time there was this much fear was BTC’s $3,000 bottom in late-2018.
“Bitcoin: Enough said here. Examples of the last times we’ve seen these levels on the index: February 2018, the low at $6,000 crash. April 2018, the new low there. November-December 2018, the $3,000 bottoming,” he noted.
Enough said here.
Examples of the last times we've seen these levels on the index:
▫️ February 2018, the low at $6,000 crash.
▫️ April 2018, the new low there.
▫️ November-December 2018, the $3,000 bottoming. pic.twitter.com/bKWxKuEdbn
— Crypto Michaël (@CryptoMichNL) March 14, 2020
If historical precedent continues providing insight into the future, this factor does seem to suggest that there is a decent chance that BTC will see some upside from here.
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