Bitcoin (BTC) may drop more than 40% from last week’s bottom, new data warns as an analyst grapples with what he says is now a bear market.
In a series of tweets on May 20, popular trader and analyst Rekt Capital plot that the BTC/USD pair should drop to around $20,000 to adjust to historical norms.
BTC Death Cross Price Target Now $22,700
Much debate has surrounded the constructions of the so-called “death cross” on the Bitcoin chart. These involve the 50-period declining moving average (50MA) crossing below the 200MA.
Often in the past, such an event has caused prices to drop considerably, marking what Rekt Capital calls “generational bottoms.”
“Most of the time, the depth of a USDBTC correction before the Death Cross is similar to the depth of the retracement after the Death Cross,” he summarized.
However, both March 2020 and May 2021 broke the rules when it comes to post-death cross losses: In both cases, the death cross, itself, set the bottom.
In January 2022, the historical trend seemed to return, as a death cross event came after BTC/USD had already declined 43% from its November 2021 all-time high of $69,000.
However, another 43% from there puts the pair at $22,700.
twenty.
I’m honest #BTC has crashed -43% since November ’21 prior to the Death Cross…USDBTC could retrace a bit more to reach an overall retracement of -43% post-Death Cross, should this historical tendency continue to repeat
This would result in a ~$22,700 USDBTC#crypto #bitcoin pic.twitter.com/aH91tn2xmr
— Rekt Capital (@rektcapital) May 20, 2022
“What is interesting about the -43% post-death cross scenario, however, is that it would result in $22,000 BTC,” the final tweet read, alongside a chart highlighting key opportunities. return on investment (ROI) during generational lows.
“Which ties in with the 200-SMA (orange) which tends to offer fantastic opportunities with outsized ROI for USD BTC investors (green circles highlight).”
Facing the bear market
On the other hand, fellow analyst Filbfilb, co-founder of the Decentrader trading suite, said that the time had come to admit that Bitcoin is in a bear market.
In his last market update on May 20, Filbfilb pointed to the 1-year MA as the key level to recover from the rut he was in after losing it as support in early April.
“Ultimately, we are still in a bear market. This has been the case since the price moved away from the one-year moving average that we highlighted as a key risk […] when price was rejected from that level,” he wrote.
“Until we can get that level back, we have to face the reality that we are in a bear market for USD BTC.”
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