Bitcoin price is moving down after spending almost a year in a parabolic uptrend. The Parabolic SAR indicator in the monthly timeframe has given a signal that, as in the past, has repeatedly led to a catastrophic decline in the leading cryptocurrency by market capitalization.
Even if this sell-off is the worst ever, Bitcoin could still run the risk of falling below $ 20,000. Here’s why.
2020 is a perfect storm for Bitcoin and the rest of the crypto market. Discussions of inflation, supply shocks and instability across countries have resulted in investors flocking to scarce and innovative assets.
Institutions, hedge funds, and even corporations began to watch out for Bitcoin, and the broader crypto market began to explode due to Ethereum, DeFi, NFT, and Dogecoin.
Many big names have been drawn to this space and Bitcoin is now in the portfolios of many billionaires around the world. Make an effort to buy BTC before others send it from under $ 4,000 to over $ 65,000.
All the attention has helped Coinbase list successfully, but since then Bitcoin and the rest of the crypto have been on a downward trend and now it could get a lot worse as the parabola is broken.
BTC / USD Monthly Chart | Source: TradingView
When bitcoin price broke its parabolic rally in early 2018, famous analyst Peter Brandt said Call Adjustment level around 80% for this asset. A year later, the benchmark cryptocurrency plunged to the bottom of the bear market with a full retracement of 84%.
A tool that can help traders see when an asset has become parabolic, and through this tool, where a stop-loss order is placed, can signal that Bitcoin will fall even more once the parabola has fallen for in the past.
The technical analysis tool called Parabolic SAR can detect when a trend “stops and reverses”. The most recent sell-off hit the Parabolic SAR on the monthly timeframe, and every time it did, BTC has fallen 72% or more from its all-time high. At its peak, the decline after this signal was 86% – not far from the numbers shared by Brandt.
Once the tool is activated, even the lowest percentage drop ever, there is a risk that Bitcoin will drop below $ 20,000 or even lower. At its deepest drop of 86%, Bitcoin could drop into the $ 10,000 region.
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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