in his last <a target="_blank" href="https://x.com/rektcapital/status/1870614968330047984″ target=”_blank” rel=”nofollow”>video Posted on December 21, crypto analyst Rekt Capital attempted to answer the question “What is the worst-case scenario for bitcoin right now?” After reaching a new all-time high of $108,374 on December 17, the btc price is down more than -11%.
Rekt Capital put the bitcoin price pullback into historical perspective, underscoring the historical importance of weeks 6, 7, and 8 in a “bullish price discovery trend.” Based on past cycles, such as 2013, 2016-2017, and 2021, he explained that bitcoin has a strong tendency to correct during these specific windows, with some drops reaching up to 34% or even more.
“Understanding these weeks is crucial because they tend to be problematic for bitcoin,” Rekt Capital stated, referencing past cycles where significant declines occurred within this time period. For example, in week 7 of the 2013 cycle, bitcoin saw a dramatic 75% pullback in 13 weeks. Similarly, 2016-2017 saw a 34% drop in week 8, underscoring the recurring vulnerability during these specific weeks.
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As of the current cycle, bitcoin has seen a retracement of over 10%, bringing its price to a historically critical support zone of $96,537 on the weekly chart. Rekt Capital emphasized the importance of this support level, noting: “This historical support area has enabled the move to $108,000.” It warned that failure to hold this support could trigger a more severe correction to $89,830.
Examining the price action of the past few days, Rekt Capital noted the emergence of a bearish engulfing candle on the weekly period, a technical indicator often associated with potential reversals. “We are losing resistance that became support,” he observed. This loss signifies a possible transition into a corrective period, as the price struggles to maintain its upward trajectory.
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Rekt Capital also highlighted in its analysis the importance of maintaining the 5-week technical line. “If we lose this five-week technical uptrend and the orange trend line, it would be increasing evidence that we could be moving into a corrective period,” he warned.
Additionally, he addressed CME's gap between the $78,000 and $80,000 price levels, a critical area that remains unfilled. “Delving into 26%, 27% and 28% declines could fill the entire CME gap,” Rekt Capital noted.
Historically, CME gaps tend to be filled, while there are some that have never been filled. Despite all the warning signs, Rekt Capital maintains a long-term bullish stance. “These setbacks are what allow future bullish trends in the parabolic phase of the cycle,” he explained. Drawing on previous cycles, he illustrated how corrections have historically provided needed “breathing” for the market.
In the 2021 cycle, for example, bitcoin saw a 16% pullback in week 6 and an 8% drop in week 8, but the overall trend continued up. Similarly, the current 10% pullback, while significant, could serve as a preparatory phase for the next leg of price discovery.
At the time of this publication, btc was trading at $95,000.
