In a recent video published on Dec. 21, cryptocurrency analyst Rekt Capital attempted to answer the question “What’s the worst that could happen to Bitcoin right now?” After hitting an all-time high of $108,374 on Dec. 17, BTC price is down more than -11%.
How low can the price of Bitcoin go?
Rekt Capital analyzed Bitcoin price pullbacks from a historical perspective, highlighting the historical importance of weeks 6, 7, and 8 in the “uptrend of price discovery.” Drawing on past cycles such as 2013, 2016-2017, and 2021, he explained that Bitcoin has a strong tendency to pull back during these specific windows, with some declines as high as 34% or more.
“It’s important to understand these weeks because they tend to be troublesome for Bitcoin,” Rekt Capital said, referring to past cycles that have seen major declines during this time frame. For example, in week 7 of the 2013 cycle, Bitcoin experienced a massive 75% correction over a 13-week period. Similarly, during the 2016-2017 period, week 8 saw a 34% decline, highlighting the recurring fragility of these specific weeks.
So far in the current cycle, Bitcoin has experienced a retracement of more than 10%, bringing its price into a key historical support area of $96,537 on the weekly chart. Rekt Capital highlighted the importance of this support level, noting that “this historical support area has propelled Bitcoin to $108,000.” He warned that failure to maintain this support could trigger a more severe correction to $89,830.
Examining the price action over the past few days, Rekt Capital noted the formation of a bearish engulfing candlestick pattern on the weekly timeframe, a technical indicator often associated with a potential reversal. “We are losing resistance turning into support,” he observed. This loss suggests that the price could be entering a correction period as the price struggles to maintain its upward trajectory.
Rekt Capital also noted the importance of maintaining the 5-week technical line in its analysis. He warned: "If we lose this 5-week technical uptrend and the orange trend line, then there is increasing evidence that we may be entering a correction period."
Additionally, he mentioned the CME gap between $78,000 and $80,000 as a key area that has yet to be filled. “Drilling down to 26%, 27%, 28% declines could fill the entire CME gap,” Rekt Capital noted.
Historically, CME gaps tend to get filled, while some gaps never get filled.
Despite all the warning signs, Rekt Capital remains bullish in the long term. “These pullbacks are what fuel future uptrends in the parabolic phase of the cycle,” he explained. Drawing lessons from previous cycles, he explained how corrections historically provided the market with the necessary “breathing time.”
For example, in 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% retracement, while significant, can serve as a preparatory stage for the next phase of price discovery.
At press time, BTC is trading at $95,000.
