Bitcoin has seen a sharp correction after tapping $9,800 during Monday’s trading session. As of the time of this article’s writing, the cryptocurrency trades for $9,300 — more than 5% below the highs.
This rejection at a crucial resistance zone (~$10,000) has confirmed to a number of analysts that more downside is likely. A historically-accurate trader went as far as to say that the entire crypto market will see a minimum correction of 25%.
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Bitcoin & Crypto Market Primed to See Strong Correction
The fact that BTC has managed to hold the $9,000s for nearly two months now has been a bullish sign to some. They argue that the consolidation is extremely similar to that seen at the start of BTC’s last bull market.
Yet not everyone is convinced.
A Bitcoin trader recently shared the chart seen below. It shows that after a strong rally of over 100% from March’s lows, a 25% correction in the cryptocurrency market is likely.
Bitcoin dropping by 25% from current prices would result in a price of $7,000. And Ethereum doing the same would mean a move to the $175 region.
Backing this bearish sentiment, the trader in question pointed to two things:
- The relative strength index (RSI) of the cryptocurrency market failed to break above a downtrend formed in May.
- The cryptocurrency market failed to break above crucial resistance levels.
Bitcoin price chart shared by pseudonymous crypto trader Dave the Wave (@Davthewave on Twitter). Charts from TradingView.com
The trader who shared the chart below predicted that Bitcoin would retrace to $6,400 when no one thought that would happen. He has also made a number of accurate medium-term predictions, calling that BTC would top its 2020 bull trend around $11,000.
Supporting the expectations of an impending move to the downside is ByteTree’s Charlie Morris.
As reported by NewsBTC, the investor and analyst wrote that Bitcoin’s fair price is well below current levels:
“1-week network velocity down to 454%, 5-wk 556%. Tx value down, av tx size down, fees down, MRI shot to pieces. Why the lack of interest? Can’t see price holding up. Fair value <$7k,” Morris wrote.
S&P 500 Correlation Could Negate Bear Trend
Although Bitcoin may have a fundamental and technical case for a correction, strength in the S&P 500 could negate that trend.
As observed by JPMorgan earlier in June, “Cryptocurrencies have traded more like risky assets like equities—a significant change relative to the prior couple of years.”
That’s to say that should American equities surge, so too should BTC.