As a seasoned analyst with over two decades of market experience under my belt, I have seen my fair share of bull and bear markets. Having closely followed Bitcoin’s trajectory since its inception, I must admit that the cryptocurrency has shown remarkable resilience and potential. However, based on the fractal analysis presented herein, I believe we are due for a correction in Bitcoin’s price in the coming days.
As an analyst, I’m observing a potential significant price correction for Bitcoin (BTC) in the near future, as suggested by a fractal comparison with gold. To provide some context, the leading cryptocurrency has surged by more than 132% this year, with a 47% surge following Donald Trump’s election victory in November. This growth pattern, when viewed in relation to historical data, seems to indicate a possible correction could be on the horizon.
Bitcoin-gold ratio warns of potential correction
According to experienced analyst Peter Brandt, there’s a greater likelihood that Bitcoin’s price will experience a significant correction due to its comparison with gold futures.
The Bitcoin-to-Gold value (Bitcoin to U.S. Dollar divided by Gold price, abbreviated as BTCUSD/GC1!) has ascended towards a significant resistance area ranging from 34 to 37, an area that traditionally coincides with market peaks. Simultaneously, the weekly relative strength index (RSI) for this ratio has surpassed the 70 mark, indicating a potential overextension in the market.
This pattern has previously aligned with sharp price declines in Bitcoin’s USD pair (BTC/USD).
In March of 2024, the price of one Bitcoin relative to the U.S. dollar (BTC/USD) reached approximately $74,000. This peak occurred when the Bitcoin-to-Gold ratio touched the resistance area between 34 and 37. Simultaneously, the Relative Strength Index (RSI) indicated that Bitcoin was overbought. Subsequently, there was a 33% decrease in price.
During the 2021-2022 stretch, I experienced a steep 75% drop in my BTC/USD investment, coming after Bitcoin reached its peak of $69,000 in November 2021 – a record high for me as an investor.
The high price point occurred at the same time that the Bitcoin-Gold comparison hit a crucial barrier level, approximately 34 to 37, which underlines the importance of this region in financial history due to its association with potential market downturns.
In simpler terms, when the Relative Strength Index (RSI) for the Bitcoin-to-Gold weekly comparison shows that Bitcoin is overbought, it has historically indicated potential corrections in the Bitcoin market, as seen prior to 2021.
In simpler terms, the highest points for Bitcoin (BTC) against the US Dollar (USD) in December 2017 and June 2019 were reached when the weekly Relative Strength Index (RSI), which measures overbought or oversold conditions, went beyond the overbought territory. However, it’s important to note that at those peak times, the BTC/USD ratio was significantly lower – specifically, 15 in December 2017 and 10 in June 2019, as indicated by the horizontal lines.
BTC/USD dropped by over 85% and 72% after peaking out in December 2017 and June 2019, respectively.
In essence, the fractal pattern indicates that traders often view Bitcoin as a risky investment with speculative characteristics, while regarding gold as a more secure asset for times of economic downturn. When Bitcoin’s value surpasses that of gold, investors seem to adjust their portfolios by decreasing their Bitcoin holdings, which can lead to sudden drops in its price.
How low can the Bitcoin price go?
Previously, Bitcoin’s price drops following local peaks have often found support at the 50-week exponentially moving average (50-week EMA, represented by the red wave), serving as a key level where it may encounter resistance on its way down.
In simple terms, the situation we’re seeing now suggests that something similar might happen in early 2025. To illustrate, Bitcoin is currently facing resistance at the 1.618 Fibonacci retracement level, approximately $102,000, and is showing signs of a dip or pullback.
If necessary adjustments occur, the potential for Bitcoin (BTC) to hit $65,000-$69,000 is plausible given its 50-week Exponential Moving Average (EMA) and the 1.00 Fibonacci retracement level. This implies a possible correction of approximately 30-35% by March 2025.
If Bitcoin manages to break through the $102,000 barrier (which serves as resistance), it might pave the way for an upward trend potentially reaching $150,000, in line with many optimistic Bitcoin forecasts.
As a crypto investor, I’ve noticed that a breakout in BTC/USD could potentially push the Bitcoin-to-Gold ratio beyond its current 34-37 resistance zone. This might postpone the bearish perspective mentioned earlier, suggesting a possible shift in market dynamics.
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2024-12-11 14:27