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What To Expect When Crypto Corrects

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For all intents and purposes, Bitcoin is back in a bull market. But even bull markets don’t always simply move upward in a straight line. Along the way, the road gets rocky, and violent and volatile corrections wipe out weeks of progress made in a matter of one or two.

Data shows that past bull market corrections average roughly 37% in downside, according to iconic career commodities trader Peter Brandt. If a similar correction follows the recent rally, here is the potential target for the bottom of what is likely to be a short-lived spike down, along with a look at why the cryptocurrency corrects to such a specific price point in bull markets.

Pro Trader Peter Brandt Points To Possible 37% Correction In Bitcoin Based On Past Bull Markets

Bitcoin price is up 20% in November 2020 alone. From the early September bottom to the recent high, in less than three months the leading cryptocurrency by market cap added more than 65% to its total value per BTC.

Since the Black Thursday bottom, Bitcoin has risen over 330%. The last seven weekly candles have been green and price action has gone parabolic. At this point, it is becoming difficult to deny that the top crypto asset is beginning another bull run.

RELATED READING | BLOOMBERG SENIOR STRATEGIST: BITCOIN MAY TURN “PARABOLIC” IN 2021

But even Bitcoin corrects during bull markets, and when it does, the results can be violent. According to Peter Brandt, who famously predicted the over 80% decline from top to bottom based on nothing but data from past parabolic breakdowns, Bitcoin bull market corrections decline roughly 37% on average.

Brandt warns that there were nine “significant corrections” during the last bull market, while this time around, the cryptocurrency has only had two 10% pullbacks. Each correction is roughly 14 weeks from a new peak to peak. Currently, the cryptocurrency is on week twelve in a row without anything meaningful for a correction.

Reading between the lines, Brandt is warning that a correction is coming and that buyers need to beware.

Bull market corrections average to about 37% according to data | Source: BTCUSD on TradingView.com

Why The Cryptocurrency Appears To Crash To The Same Key Level During Bull Runs

Brandt’s data and the Bitcoin price chart itself, show an average of roughly 37%. Most corrections according to our interpretation of the chart above, resulted in a 40% drop. Crashes typically lasted less than a month in most examples.

But why the recurring number when it comes to cryptocurrency bull market corrections? The answer can be found in mathematics, potentially.

RELATED READING | NEARLY 99% OF BITCOIN OWNERSHIP HAS BEEN PROFITABLE, DATA REVEALS

Bitcoin corrects roughly 37-40% when it does finally pull back. That range is a sweet spot for the 0.618 Fibonacci retracement level or roughly 61.8% of the initial rally.

It is not clear why this mathematical relationship with price action exists but can be used strategically to find potential levels where support may exist and buyers could show up with strength.

bitcoin bull market corrections

Each crash falls back to the 0.618 Fibonacci level | Source: BTCUSD on TradingView.com

The level could be intuitively an attractive value to investors at that point, prompting the sudden interest. A drop of such magnitude at current levels would take Bitcoin price back to roughly $11,500, and as you can see below that price points sandwiched between the 0.618 level from all-time high and the 2020 rally, and over three years worth of bear market resistance.

FEATURED IMAGE FROM DEPOSIT PHOTOS, CHARTS FROM TRADINGVIEW.COM





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PlanB feeling ‘uneasy’ as 41% of his followers tip $100K BTC won’t happen this year

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PlanB, the brainchild behind the Bitcoin stock-to-flow model, has revealed he is feeling “uneasy” about his renowned price predictions due to the recent downtrend in markets.

The stock-to-flow (S2F) model, which has predicted BTC prices with some degree of accuracy over the past two years, has been called into question by some of his followers in a recent Twitter poll.

The anonymous analyst surveyed his followers on June 21 asking them what price they thought BTC would reach by the end of the year. He used the results to compare them to a similar survey in March when market sentiment was overwhelmingly bullish.

Of the 124,595 respondents to the latest poll, 41% thought that BTC prices would remain below $100K by the end of the year, which would invalidate the S2F model. That’s two and a half times the 16% in the previous poll who thought the lazer eyes crowd would be disappointed this year.

PlanB who originally published the price predictor in March 2019, pinned a message admitting that even he feels a little “uneasy” when BTC prices deviate from the model. However, the analyst noted that the model had managed to hold previously in March 2019, again in March 2020 when the pandemic caused a global market meltdown, and once more in September 2020.

Preston Pysh, the founder of The Investors Podcast Network, commented that it was difficult for a model to account for a blizzard of bad news that has accelerated the market downturn.

“You mean your model doesn’t account for 40%+ of mining rigs getting banned & forced to turn-off & relocate to various parts of the world…and with no forward notice to companies/entitles for the extraordinary expense to their heavily denominated BTC treasuries/retained earnings.”

The model is a calculation of a ratio based on the existing supply of Bitcoin against how much is entering circulation. The scarcer the asset becomes due to the four-year halving cycles the higher the price. PlanB’s model predicts an average price of $288K over the next three years.

Related: $288K BTC price ‘still in play’ says PlanB as Bloomberg champions Bitcoin halving

At the time of writing, Bitcoin had gained 2.9% over the past 24 hours to trade at $34,450 according to CoinGecko. The asset is currently 45% down from its all-time high of $64,800 on April 14.





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Bitcoin in uptrend but BTC may never beat gold’s $10T market cap — ex-NYSE head

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Bitcoin (BTC) is on a “lower left to upper right trend” and its volatility should not scare investors, the former head of the New York Stock Exchange says.

In an interview with CNBC on June 23, Thomas Farley revealed long-term convictions about Bitcoin and dismissed concerns over BTC price losses.

Bitcoin: Going up, but not “up only”

Coming a day after CNBC pundit Jim Cramer admitted that he sold his Bitcoin stash, suggesting that BTC/USD was going as low as $10,000, Farley provided some much-needed mainstream bullishness.

“With respect to the recent price moves, I’m kind of sanguine about them — Bitcoin’s a very volatile asset class, in part because it’s a new asset class,” he told the network.

“I have no doubt it’ll go up, it’ll go down over the long term — I still think it’s a lower left to upper right trend and I think we’re going to see that play out over five years.”

With mining upheaval coming from China still on everyone’s lips, popular mainstream criticism of Bitcoin’s energy usage was also swiftly cast aside as a temporary issue.

“I think this kerfuffle is an interesting conversation, but by and large I think it’ll be resolved because I think the blockchain at its core adds to its efficiency and in fact will add to energy efficiency over time,” he continued.

Less convinced on gold. vs. Bitcoin

When it comes to Bitcoin as “digital gold,” however, Farley was more conservative in his predictions.

Now firmly beneath a trillion-dollar market cap, Bitcoin must transform in order to take on store-of-value safe-havens.

Related: Joining the ranks: Bitcoin’s correlation with gold and stocks is growing

“I think the upper bound for now is gold, which is about a $10 trillion market cap,” he added.

“In order for Bitcoin to one day exceed gold, it’ll have to be more of an accepted form of currency — I’m not sure, frankly, if it ever gets there.”

Proponents argue that Bitcoin, by its very nature, faces just a matter of time before eclipsing gold thanks to the latter’s ultimately infinite supply and inability to beat Bitcoin in all aspects of “money.”

The precious metal saw a major sell-off last week after comments on policy from the United States Federal Reserve.

To beat gold, Bitcoin would need to trade at more than $533,000 with the current supply.