Bitcoin’s price correction towards $20,000 is likely to happen according to the RSI indicator
According to the RSI indicator, the price of Bitcoin is heading towards a correction and it might reach the $20,000 mark. Every time the price of Bitcoin reached or even exceeded the critical level of “90” on the RSI indicator on the weekly chart, signaling a heavily overbought BTC, a major correction between -40% and -93% followed.
The current price drop could be part of a larger correction. This is supported by an indicator that has predicted major corrections and tops in the Bitcoin price with a 100% hit rate so far.
There is an indicator that suggests that the price of Bitcoin is in the midst of a major market correction. This indicator has had a hit rate of 100% so far. That sounds impressive, but in terms of the fact that there are only 6 such signals to fall back on, the whole thing should obviously not be overrated. Moreover, Bitcoin is a very young and still developing market, so indicators from the past are not necessarily valid for the present or future.
We are talking about the RSI indicator on the Bitcoin price on a weekly basis.
Every time the price of Bitcoin reached or even exceeded the critical level of “90” on the RSI indicator on the weekly chart, signaling a heavily overbought BTC, a major correction between -40% and -93% followed.
Read more about the price of Bitcoin and find other important business headlines with the Born2Invest mobile app.
The “bearish” scenario for the price of Bitcoin
When talking about the price of Bitcoin and its long-term development, we often talk about 4-year cycles. Each of these cycles ends with a Bitcoin halving, which initiates the next cycle. Accordingly, there were three such cycles so far and are currently in the fourth cycle after the 3rd halving in May 2020.
What is striking is that each cycle so far has produced two such signals. The first one marked a major correction in the midst of a too euphoric market and the second one the end of the bull trend and thus the beginning of the next bear market. Currently, we have the 1st signal in the RSI indicator in the fourth cycle.
But what does it mean exactly?
Price drop of BTC part of a 50% correction?
The first such signals of each cycle are much shorter in time. To be more precise, so far they have lasted between 5 and 12 weeks and resulted in -40 to -75% corrections. Some may think that with such numbers, it is no longer possible to speak of a correction, but we use this term because these downward movements were short-term and they were followed by a continuation of the previous uptrend.
Each of these corrections led the price of Bitcoin back to the 25 MA line on the weekly chart. Currently, this trend line is located at just under $17,800. The longer this correction continues, the further up the 25 MA line will move.
If this pattern continues, a return to the $20,000 support level would be a possible scenario. This would correspond to about a 50% correction to the previous high at $42,000 and thus fit very well within the framework of previous corrections.
The good news is that bearish was deliberately put in quotes in the first headline. Because if this indicator proves to be true, it also means that there is a much higher all-time high ahead for the Bitcoin price.
(Featured image by Roger Brown via Pexels)
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in CRYPTO MONDAY, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Disclaimer: This analysis was posted to the Bitcoin Booth Telegram channel on 1/24/2020 and is based solely on the work of the analysts there. Of course, neither this nor any other article on cryptomonday.com constitutes investment advice.
AstraZeneca Increases Its Commitment to Spain with More Investments
AstraZeneca’s commitment to the Spanish territory can also be seen in the creation of infrastructure since it has allocated a...
Italian-Irish Startup HTMS Closes $15 Million Round
HTMS has developed technology that can improve the energy efficiency and thermal capacity of heating and cooling systems for industrial...
The Market for CBD Skincare Products Is Gaining Popularity
The Asia-Pacific (APAC) region will see significant CAGR growth over the forecast period 2022-2027, as China is one of the...
Crypto Fear and Greed Index Indicates Bullish Sentiment
In summary, the recent rise in the Crypto Fear and Greed Index and the strong performance of Bitcoin are signs...
Seed Money’s Third Campaign Started on CrowdFundMe
To date, Seed Money has as many as 580 members and, thanks to the capital raised in the previous two...