Bitcoin Bear Market Comparisons to the Current Market
Today I would like to show you all an interesting comparison I found on Bitcoin. One popular tool for predicting a long-term bull market or bear market is the crossover of the 50 MA and the 200 MA on the daily time frame. When the 50MA crosses above the 200MA, this is called the golden cross and more often than not will lead to multi-month or multi-year bull market. When the 50MA crosses below the 200MA, this is called the death cross and more often than not will lead to a multi-month or multi-year bear market.
On the charts above, I am looking at the weekly time frame for the candles and indicator below, however I set the moving averages to the daily time frame to show the majority of the death crosses in Bitcoin's history. The blue line is the 50 day MA, and the orange line is the 200 day MA.
As you can see, the last 3 death crosses have resulted in multi-month or multi-year down trends.
The indicator below is my custom indicator called the True Trend Indicator which I plan on releasing soon. This indicator is great for identifying trends and works very well as a divergence indicator as well. One of the things that stood out to me is how similar the big peaks are that signaled blow off tops for bull markets, and the steep decline that followed. Another interesting thing is almost all of them have had some sort of small bounce back just slightly above the zero line falling in line with all of the previous relief rallies after the initial blow-off drop. This relief rally is exactly what we are seeing now for this bull run. We had a massive +50% drop from the 60k highs and since then the market has been following this pattern of a relief rally before more downside.
If the market repeats history the same way it has in these past 3 examples, with both the death crosses and the similar patterns on the True Trend Indicator, then we can expect to see Bitcoin just at the early stages of a multi-month or multi-year bear market. These previous bear markets have resulted in a 70-86% drop from each all-time high. That would mean we should expect to see this bear market bring Bitcoin down to anywhere from $12,000 to the highest of $20,000. $20,000 will certainly be a popular price, but structurally, the $12,000 shows a stronger support area when looking at it on the weekly level.
For now, price is still above the daily 200MA, and if that breaks to the downside a bear market will become a lot more likely, so this is something to keep a close eye on in the coming weeks.
I hope you liked this idea, please give it a thumbs up if you found it useful!
On the charts above, I am looking at the weekly time frame for the candles and indicator below, however I set the moving averages to the daily time frame to show the majority of the death crosses in Bitcoin's history. The blue line is the 50 day MA, and the orange line is the 200 day MA.
As you can see, the last 3 death crosses have resulted in multi-month or multi-year down trends.
The indicator below is my custom indicator called the True Trend Indicator which I plan on releasing soon. This indicator is great for identifying trends and works very well as a divergence indicator as well. One of the things that stood out to me is how similar the big peaks are that signaled blow off tops for bull markets, and the steep decline that followed. Another interesting thing is almost all of them have had some sort of small bounce back just slightly above the zero line falling in line with all of the previous relief rallies after the initial blow-off drop. This relief rally is exactly what we are seeing now for this bull run. We had a massive +50% drop from the 60k highs and since then the market has been following this pattern of a relief rally before more downside.
If the market repeats history the same way it has in these past 3 examples, with both the death crosses and the similar patterns on the True Trend Indicator, then we can expect to see Bitcoin just at the early stages of a multi-month or multi-year bear market. These previous bear markets have resulted in a 70-86% drop from each all-time high. That would mean we should expect to see this bear market bring Bitcoin down to anywhere from $12,000 to the highest of $20,000. $20,000 will certainly be a popular price, but structurally, the $12,000 shows a stronger support area when looking at it on the weekly level.
For now, price is still above the daily 200MA, and if that breaks to the downside a bear market will become a lot more likely, so this is something to keep a close eye on in the coming weeks.
I hope you liked this idea, please give it a thumbs up if you found it useful!
Comment:
I warned you all about this potentially happening, and we are just getting started. If you missed the sell you can try to sell on whatever bounce comes out of this, but it will resume dumping very quickly thereafter so make sure you do not wait too long!
Comment:
Updated chart with indicator. BTC just had a golden cross on the daily moving averages (50&200MA) however we have seen a brief golden cross before dipping back to a death cross in previous bear markets. The true trend indicator is showing the same shallow peak on the relief rally that we see at the beginning of all the other bear markets, and with this drop in price action we can anticipate this small peak to follow suit shortly after which will help confirm the market is behaving the same way as previous examples.
