The recent price crash in Bitcoin has left many investors concerned about the future direction of the cryptocurrency. According to Jacob Canfield, a trading mentor at the Trading Mastery, there could be more downside ahead if historical patterns are anything to go by. Canfield’s analysis focuses on the retesting of yearly open levels in Bitcoin’s pricing trends. He notes that Bitcoin has a tendency to retest these levels within the year, confirming either bearish or bullish trends. This pattern has been observed consistently since 2017, with the exception of 2023 and 2024.
Moreover, Canfield highlights specific instances where bearish retests of yearly open prices have preceded significant market crashes, such as the 2018 opening BTC price retest before the COVID-19 pandemic crash. Similarly, the retest of the 2019 yearly open during the 2020 Covid Crash and the bearish retest of the 2020 yearly open within the first 3 months of 2020 are mentioned as examples of this pattern in action. Canfield also draws attention to the 2021 opening price retest, which marked the lowest point before a significant rally to a peak of $69,000.
Speculations on Potential Bottom
Looking ahead, Canfield speculates about where Bitcoin may find a bottom in the coming months. He points to technical indicators such as the 0.618 Fibonacci retracement level and the weekly 200 EMA/MA Ribbon as crucial factors to consider. These indicators align closely with the projected yearly open for 2024, suggesting a potential support zone in the $38,000 to $42,000 range. If Bitcoin were to reach this level, it would represent another -33% drop for BTC holders.
Canfield also considers the possibility of Bitcoin capitulating all the way down to the 2023 yearly open at $16,500, similar to what happened in 2019. However, he emphasizes that the convergence of key indicators around the 2024 opening price gives a higher probability of forming a bottom in that region. This leaves room for different scenarios to unfold, highlighting the cyclical nature of Bitcoin’s market dynamics.
Canfield’s analysis provides valuable insights into the potential future trends of Bitcoin based on historical precedents. While the current price stabilization above $57,000 offers some respite, the possibility of further downside cannot be ignored. The role of yearly open retests and technical indicators in forecasting market movements underscores the importance of thorough analysis in cryptocurrency investing. Canfield’s analysis serves as a reminder of the inherent volatility in the crypto market and the need for caution when making investment decisions. As Bitcoin continues its price journey, it remains to be seen whether historical patterns will once again provide valuable clues for investors.
