bitcoin price is now down more than -22% from the mid-March high of over $73,000. While btc is currently stabilizing above $57,000 following the recent price drop, there could be even more declines ahead if history repeats itself, according to Jacob Canfield, trading mentor at Trading Mastery. Canfield's latest news analysis points to a possible further drop in the price of bitcoin, potentially reaching lows not seen since the beginning of the year.
Why bitcoin Price Could Fall Another 33%
Canfield’s analysis on TradingView is based on historical patterns observed in bitcoin price trends. “Historically, bitcoin loves to retest yearly opening levels,” Canfield notes. According to him, these retests can confirm bearish or bullish trends, but they are a constant feature of bitcoin’s market behavior. Since 2017, each year’s opening price has been retested within the year, with the notable exceptions of 2023 and 2024 (so far).
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“Since 2017, the yearly open has been retested every year except 2023 and 2024,” Canfield commented. For example, the bearish retest of btc’s 2018 opening price occurred just before the COVID-19 pandemic crash, and similar patterns were seen in the years since. “Even the 2019 yearly open at $3,850 was retested during the 2020 Covid crash,” the crypto analyst added.
Furthermore, the 2020 yearly open was retested in the first 3 months of 2020. The 2021 opening price was also retested and marked the low point before a significant rally that led to a peak of $69,000, just before the FTX crash. “The 2022 yearly open was a bearish retest similar to 2018 before lows around $16,500. Similar to the 2021 yearly open retest that gave us our bottom, this gave us our local top,” Canfield observed.
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Looking ahead, the cryptocurrency analyst speculates on the possible bottom bitcoin will hit in the coming months. “This is where it gets interesting. The 2023 and 2024 yearly opens have yet to be retested. The question is: do we form a bottom at the 2024 yearly open ahead of more all-time highs or do we capitulate to the 2023 yearly open at $16,500 like we did in 2019?”
Crucial indicators to consider
The answer may lie in several technical indicators that Canfield considers pivotal. First, Canfield mentions the 0.618 Fibonacci retracement level. This indicator aligns closely with the projected yearly open for 2024, suggesting a higher likelihood of finding support in the $38,000 to $42,000 range. Notably, such a low price drop would mean another -33% for btc holders.
The second crucial indicator is the weekly 200-day exponential moving average (EMA/MA Ribbon). This indicator is also converging around the 2024 opening price, reinforcing the potential for this level to act as a strong support zone. “This gives us a higher probability that we form a bottom around that region and the 2023 annual open may act like the 2017 annual open and never be tested again,” Canfield speculates.
Despite the bearish outlook, Canfield’s analysis leaves room for several scenarios, emphasizing the cyclical nature of bitcoin’s market dynamics and the role of historical precedents in predicting future trends. “Either way, I think this gives us a high-probability target based on historical precedents of where we can find a local bottom,” he concludes, inviting further discussion and analysis from the community.
At the time of writing, btc was trading at $57,479.
Featured image from iStock, chart from TradingView.com
