Bitcoin price has fallen more than 50% from recent highs, falling to $ 30,000 in a flash. The sell-off was enough to shock the entire market, resulting in most of the liquidations and coins being deposited since Black Thursday.
The talk now is that the bull run is over. However, there are potentially two different paths the cryptocurrency could take depending on its RSI and past bull market performance.
Has the top of the Crypto Bull come in?
After more than a full year of an uptrend, the volatile crypto market has undone months of progress in days. The sharp reversal caused a 50% decline across the board and was enough to startle the market.
Related reading | Bear phase fractal warns of pain, Bitcoin Bull Market remains unbroken
Several top signals also appeared, such as the Pi Cycle Top Indicator and Relative Strength Index, which hit overbought levels on a monthly basis. However, the monthly RSI has been pushed back into the oscillator’s normal range by bears.
The monthly RSI is looking especially bearish | Source: BTCUSD on TradingView.com
There is also a bearish divergence stretching across past bull cycle peaks that could provide clues as to what is to come.
If bears can close the monthly Relative Strength Index back below overbought levels, the 2017 scenario B bull market could be over. However, Scenario A shows that the bull holds the key level and makes another sharp move to the top to end the bull market.
A stormy Bitcoin forecast could lead to an unexpected scenario
Scenario A should prove the stock-to-flow model to be accurate and the leading cryptocurrency by market cap will head towards hundreds of thousands of dollars per coin.
But what if the stock-to-flow model, and every great analyst who’s had a look at a Bitcoin chart, is dead wrong about expectations or something catastrophic happens? It sounds unrealistic, but nothing is guaranteed in the markets – not even the success of Bitcoin.
Crowds of analysts have created charts showing what this path looks like by the hundreds of thousands, but what could a devastating collapse look like instead?
Beware of a weak spot in the Ichimoku cloud | Source: BTCUSD on TradingView.com
With a bear market happening now and the stock-to-flow model making expectations so high, impatient investors’ short investment horizon could lead to a sharper sell-off unless BTC trades at hundreds of thousands before the end of the year.
A failure of the bull market and failure to produce the results investors expect could lead investors to abandon cryptocurrency entirely. Unless they are inside for the technology. The warning of such an event is a vulnerability in the monthly Ichimoku cloud.
Related reading | Lack of “surrender” volume suggests that Bitcoin is doomed to more downward movements
The monthly price chart in Bitcoin also forms a massive bearish wedge that spans nearly a decade. A breakdown could set the trajectory for going through the Kumo Spin. This is a common setting that depends on how the indicator itself is working.
And while anyone with a bullish view of Bitcoin, even remotely, would immediately write this off, there’s no denying that the cloud twist is there. The cops didn’t see the recent crash either – could they be blind to this possibility too?
Featured image from iStockPhoto, Charts from TradingView.com