Is Bitcoin Heading For Another Crash? here’s what the data says

Bitcoin (BTC), the leading cryptocurrency by market capitalization, is trading in a sideways trend after declining from the $28,000 level. At the time of writing, BTC is currently priced at $26,800, having experienced significant downside on all time frames. The question on everyone’s mind now is whether this bearish run will continue or whether bitcoin is headed for another crash.

Can Bitcoin Holders Expect Another 40% Drop in the Coming Weeks?

Cryptocurrency enthusiasts and traders closely monitor the performance of bitcoin following its recent price drop. According According to Miles Deutscher, a veteran cryptocurrency analyst, bitcoin usually experiences a temporary rally after a decline, followed by a new low 5-8 weeks later.

Deutscher’s analysis shows that 2020 saw a 56% drop in bitcoin’s price in 59 days after initially rallying. Similarly, in 2021, the price of bitcoin fell by 24% in 47 days, and in 2022, the price of bitcoin fell by 42% in 40 days.

Simultaneously, with BTC trading at $26,800, if it experiences a 20% drop, its price could drop to $21,440, while a 30% drop would see it drop to $18,760. A 40% drop would result in a price of $16,080, potentially taking bitcoin back to the bottom of the 2022 bear market.

Is 2023 The Best Year Yet For BTC?

On the other hand, According For cryptocurrency analyst Adrian Zdanczyk, historical data suggests that the pre-election years are the best performing years on record for bitcoin, with a 98.8% chance of a bull run in 2023. Even though the worst six months of the year usually start in May. , Zdunczyk believes that a bullish trend is likely to emerge in the coming months.

Looking at the weekly chart, Zdunczyk noted that bitcoin is currently experiencing a complete reversion to its 200-week trendline, completing a mean reversion. While a strong correlation (0.42) exists between bitcoin and the S&P 500, key support near $25,000 has been defended. However, if there is a breakdown of this support, traders could see a drop in the price towards the lower $20,000 region.

Furthermore, Zdunczyk believes that further downside is possible if bitcoin sustains below $30,000. However, the support level has been confirmed by several technicals after a successful retest of the 200-day baseline. Meanwhile, the 50-day average volatility has declined, and the longer-term uptrend has temporarily come to an end.

Zdunczyk’s analysis shows a clear head and shoulders pattern complete with a technical breakout target of $22,000. However, if the pattern fails to break, it could trigger a cascading rally above $35,000.

As seen in the chart above, local resistance supported by BirbicatorPRO (BPRO) analysis currently lies at $28,000. Bears retain control until there is a strong close above this level. Bitcoin bulls should wait for a decisive breakout above $30,000 to ensure a more credible upward move.

Featured image from iStock, Chart from TradingView.com