Bitcoin Price Dips Below Critical Level, Raising Concerns of a 50% Decline
The recent drop in Bitcoin price has caused it to fall below a crucial support level at $27,000. This is significant because in the past, when this level was lost, the cryptocurrency experienced a decline of 50% or more.
Bitcoin Forecast Turns Uncertain
Despite showing resilience in recent weeks, Bitcoin’s price action has taken a hit as it dropped below $27,000. What’s concerning is that BTCUSD has also fallen below the bottom of the Ichimoku cloud on the weekly timeframe.
Historically, when Bitcoin has fallen out of the cloud, it has led to a significant drop of around 50% in its value.
Possible Crypto Crash Ahead?
The Ichimoku cloud serves as dynamic support and resistance for Bitcoin and reacts to volatility. Losing this support level in the past has had dire consequences.
In March 2020, when Bitcoin fell out of the cloud during the onset of COVID-19 in the US, it experienced a flash crash of 50% over two weeks. Similarly, in May 2022, after losing the weekly Ichimoku cloud due to the LUNA collapse, Bitcoin plunged by 55% over a span of 20 weeks.
Key Levels to Monitor: $12,000 or $42,000
If Bitcoin were to crash by another 55%, its price would plummet to around $12,000 per coin. This would be especially catastrophic for altcoins that are already down by more than 90% from their all-time highs.
However, there is a notable difference this time. The Tenkan-sen and Kijun-sen lines, represented by blue and maroon respectively, are currently in a bullish crossover. In the previous instances of losing the cloud, these lines were in a bearish crossover.
If Bitcoin manages to hold within the bottom of the cloud, it could potentially target the top of the cloud at around $42,000 per coin. But if it fails to do so, we may witness another significant decline in its value.
Hot Take: Uncertainty Surrounds Bitcoin’s Future
The recent drop below a critical support level and the breach of the Ichimoku cloud have raised concerns about Bitcoin’s future. The cryptocurrency has previously experienced drastic declines when these events occurred, leading to losses of 50% or more.
While there is some hope with the bullish crossover of certain indicators, caution is still advised. The next few weeks will be crucial in determining whether Bitcoin can maintain its position within the cloud or if it will face another sharp decline.
Sources: CoinChartist VIP
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