Bitcoin price has already fallen more than -22% since its mid-March high above $73,000. Although BTC is currently stabilizing above $57,000 following the recent price crash, more downsides could lie ahead if history repeats itself, according to Jacob Canfield, a trading mentor at the Trading Mastery. Canfield’s latest analysis points to a possible further decline in the Bitcoin price, possibly reaching a low not seen since the beginning of the year.
Why Bitcoin Price Could Crash Another 33%
Canfield’s analysis on TradingView is based on historical patterns observed in Bitcoin price trends. “Historically, Bitcoin likes to retest annual open levels,” Canfield notes. According to him, these retests can confirm bearish or bullish trends, but are a consistent feature of Bitcoin’s market behavior. Since 2017, each year’s opening price has been retested within the year, with the notable exceptions of 2023 and 2024 (so far).
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“Since 2017, the annual open has been retested every year except 2023 and 2024,” Canfield noted. For example, the bearish retest of BTC’s opening price in 2018 occurred just before the COVID-19 pandemic, and similar patterns were observed in subsequent years. “Even the 2019 annual open at $3,850 was retested during the 2020 Covid Crash,” the crypto analyst added.
Additionally, the 2020 annual opening was retested within the first three months of 2020. The 2021 opening price was also retested, marking the low before a significant rally that led to a peak of $69,000 just before the FTX collapse. “The 2022 Yearly Open was a bearish retest, similar to 2018, before the low around $16,500. Similar to the 2021 annual open retest that gave us our bottom, this gave us our local top,” Canfield noted.
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Looking ahead, the crypto analyst speculates on the potential bottom for Bitcoin in the coming months. “This is where it gets interesting. The 2023 and 2024 annual openings have not yet been retested. The question is, do we form a bottom at the 2024 annual open before any more all-time highs, or do we capitulate all the way to the 2023 annual open at $16,500, as we did in 2019.”
Crucial indicators to keep an eye on
The answer may lie in several technical indicators that Canfield sees as crucial. First, Canfield mentions the Fibonacci retracement level of 0.618. This indicator closely matches the projected annual opening for 2024, suggesting a greater chance of support between $38,000 and $42,000. Notably, a price crash from this low would mean another -33% for BTC holders.
The second crucial indicator is the weekly 200 EMA/MA ribbon. This indicator is also converging around the 2024 opening price. It reinforces the potential for this level to act as a strong support zone. “This gives us a better chance that we will form a bottom around that region and that the 2023 annual opening can behave like the 2017 annual opening and never be tested again,” Canfield speculates.
Despite the bearish outlook, Canfield’s analysis leaves room for several scenarios, emphasizing the cyclical nature of Bitcoin market dynamics and the role of historical precedents in predicting future trends. “Either way, I think this gives us a very likely target based on historical priority for where we can find a local bottom,” he concludes, inviting further discussion and analysis from the community.
At the time of writing, BTC was trading at $57,479.
Featured image from iStock, chart from TradingView.com