In the latest video released on December 21, cryptocurrency analyst Rekt Capital attempts to answer the question, "What is the worst-case scenario for Bitcoin right now?" After reaching an all-time high of $108,374 on December 17, the BTC price has dropped by more than -11%.
How low can the Bitcoin price go?
Rekt Capital analyzed Bitcoin price pullbacks from a historical perspective, emphasizing the historical significance of weeks 6, 7, and 8 in the "price discovery uptrend." He referenced past cycles, such as 2013, 2016-2017, and 2021, explaining that Bitcoin tends to have strong pullback trends during these specific windows, with some declines even exceeding 34%.
Rekt Capital stated, "It's very important to understand these weeks as they tend to be troublesome for Bitcoin." He referenced past cycles that experienced significant declines during this timeframe. For example, in week 7 of the 2013 cycle, Bitcoin experienced a major 75% pullback over 13 weeks. Similarly, during the 2016-2017 period, there was a 34% drop in week 8, highlighting the recurring vulnerabilities within these specific weeks.
As of the current cycle, Bitcoin has experienced a pullback of over 10%, bringing its price into a historically key support area of $96,537 on the weekly chart. Rekt Capital highlighted the importance of this support level, stating, "This historical support area propelled Bitcoin up to $108,000." He warned that failure to maintain this support could trigger a more severe pullback, potentially down to $89,830.
By studying the price movements over the past few days, Rekt Capital noted a bearish engulfing candlestick pattern appeared in the weekly timeframe, a technical indicator typically associated with potential reversals. He observed, "We are losing resistance that was turning into support." This loss indicates that prices may enter a correction period, as it becomes difficult for prices to maintain their upward trajectory.
Rekt Capital also pointed out the importance of maintaining the 5-week technical line in his analysis. He warned, "If we lose this 5-week technical uptrend and the orange trend line, there is increasing evidence that we may be entering a corrective phase."
Additionally, he mentioned the gap between $78,000 and $80,000 at the Chicago Mercantile Exchange, which is a key area that has yet to be filled. "A deeper dive into the 26%, 27%, and 28% declines could fill the entire gap at the Chicago Mercantile Exchange," Rekt Capital pointed out.
Historically, gaps at the Chicago Mercantile Exchange tend to be filled, while some gaps have never been filled.
Despite various warning signals, Rekt Capital remains bullish in the long term. "These pullbacks are crucial for driving the future cycle's parabolic rise," he explained. He draws lessons from past cycles, illustrating how historical adjustments have provided the necessary "breathing room" for the market.
For example, during the 2021 cycle, Bitcoin experienced a 16% pullback in week 6 and an 8% drop in week 8, but the overall trend continued to rise. Similarly, the current 10% pullback, although significant, can serve as a preparatory stage for the next phase of price discovery.
As of the time of writing, BTC is trading at $95,000.
