With only a 30% pullback on the books, it’s difficult to see the recent phase of consolidation in Bitcoin as a major correction. Regardless of what base is currently being built in this area, it could act as the next low point in the bear market after the leading cryptocurrency by market cap hits its peak and the cycle starts again.
Here’s why the Zone is a likely target for the next big downtrend when it finally hits.
If at some point bitcoin is at the top, where does it fall?
Bitcoin’s upward trend has only just begun, and much remains to be done. But all uptrends eventually end, assets are correct, and a bear market returns prices to mean.
Bear markets are when foundations are built and only the fittest survive. The fruits of the last bear market are only now coming to light, and anyone lucky enough to hit the exact bottom has the greatest ROI on their efforts.
Related reading | Executing Bitcoin: Passing Hal Finney’s torch on to Jack Dorsey
It is not easy to bottom out, but since Bitcoin is cyclical to some extent, there is a chance that things can be predicted. Using a key zone from the last bull market that ultimately served as the 2018 bear market low, a theory can be put forward as to where the next downtrend might end.
Finding the nearest bear market floor with Fib extensions
With the help of Fibonacci retracement and extension tools that measure the 2013 high to the 2014 low, Bitcoin caught the 2017 uptrend around the 2.618 level.
Fibonacci extensions act as potential support and resistance points when no others are present. With the previous all-time high, Bitcoin is back in pricing mode and the only potential threats come from Fib extensions, negative news, or rounded numbers like $ 20,000.
Could this be the next bear market low in 2023? | Source: BTCUSD on TradingView.com
Fib extensions act like rounded numbers rather than phycological resistance level. The human brain seeks the easiest route, and investors typically enter orders in whole, rounded numbers. When it comes to how Fib levels work, things aren’t that clear, but since Fib extensions represent a percentage of the highs and lows originally set, investors can set specific goals based on measured movements.
Related reading | Bitcoin price that closes above this “hurdle” sends bulls “on the races”
Bitcoin is now trading near the same critical fib level of 2.618. It is also difficult to figure out when the cryptocurrency has bottomed out. However, due to the Bitcoin-based halving, there is a possibility that the bear market will begin in late 2022 and the next bear market low of $ 50,000 will arrive in 2023.
With a Fib-based timing tool, the next potential peak and bottom are projected forward, but it is only determined afterwards whether the timing is correct.
Of course, this time could well be different, and with the crypto asset nearing such widespread adoption that the next spike is so high, $ 50,000 in rear view will be too far to act as the next bottom.
Featured image from deposit photos, charts from TradingView.com