A cryptocurrency analyst claims that the maximum downturn for Bitcoin this cycle will be $55,000, based on technical metrics — contrary to predictions of a drop to $35,000 by some.
A decline to $35,000, as predicted by others, would signify a 72% retracement.
This scenario isn’t unprecedented. Bitcoin experienced a 77% decline from its peak of $69,000 in November 2021 to a low of $15,500 a year later, in November 2022.
Nevertheless, analyst “Sykodelic” informed his 62,000 X followers on Tuesday that forecasts of Bitcoin sinking to $35,000 by 2026 were “complete nonsense.”
“For Bitcoin to retract 75%, it must fully expand, and this cycle didn’t manage that,” he stated, noting that such retracements are only feasible when the level of expansion — indicated by the relative strength index (RSI) — “allows for that level of contraction.”
Currently, Bitcoin (BTC) is down 31% from its early October peak of $126,000, a typical occurrence even within a bull market.
Bollinger Bands as a Crucial Indicator
The analyst pointed out that Bitcoin prices have never dipped below the Bollinger Bands on a monthly basis.
They compared the current cycle to 2017, which witnessed substantial gains, yet the retracement still remained above the monthly lower Bollinger Band. After the weakest expansion on record, they questioned why a deeper contraction would follow.
“In this worst-case scenario, if we close this monthly candle below the mid-line, we could expect a maximum bottom of $55k.”
Alternative Views on Bitcoin Corrections
Jeff Ko, chief analyst at the CoinEx exchange, advised Cointelegraph that even a drop to $55,000 seems unlikely. He suggested that “the bear-case scenario would see Bitcoin revisiting the $65,000 to $68,000 levels.”
He contended that the traditional four-year cycle paradigm is fracturing, and with Bitcoin being increasingly institutionalized, “I do not foresee another 70%–80% drawdown from all-time highs.”
“Market depth, ETF participation, and a structurally more diverse investor base all imply that future corrections will be shallower and more organized compared to past cycles.”
Related: This indicator suggests we’re out of the Bitcoin bull market
Potential Catastrophe if Support Zone Fails
Meanwhile, Augustine Fan, head of insights at crypto trading software service provider SignalPlus, expressed bearish sentiments if the “critical support zone around $72,000 to $75,000” collapses.
“A breakdown will likely trigger catastrophic stops with unpredictable ramifications, considering the scale of DAT stop selling, impact on Strategy’s position, and their significant implied losses,” he explained to Cointelegraph.
At the time of writing, Bitcoin was trading around the $87,000 mark, having slightly recovered from its fall to $84,000 on Monday.
Magazine: Animoca’s bet on altcoin upside, analyst eyes $100K Bitcoin: Hodler’s Digest
