Bitcoin (BTC) could fall at least 75% from here. The chances of that happening are higher than they have been before. The parabolic run up that we saw since December, 2018 seems to have come to an end. Bitcoin (BTC) is known for declining in the same manner that it shoots up in. We do not have to go very far in history to see that. This happened just during the parabolic rally of December, 2017. The price declined and erased most of its gain and on top of that it took its time which means there is not going to be another bull market in a long time. Sure, we might see the price bottom around June or July of 2020 but we would still be a long way from the next bull run.
If we take a look at the weekly chart, we can see that the NVT indicator is flashing a sell signal. In addition to that, the price is trading in a rising wedge and it remains below a strong trend line support turned resistance. On top of all of that, the price has faced a strong rejection at the 38.2% fib extension level just as it did during the previous cycle. When the price began its downtrend below the 38.2% fib extension level last time, we saw it decline 75.30%. It is pertinent to note though that the price declined 70% prior to that. If we compare the first decline with that of the decline in the ongoing cycle till December, 2018, we can see that it declined more than that this time. BTC/USD declined 83.43% during the first downtrend in this cycle. This means that its second downtrend could also be higher than the second downtrend of the previous cycle which would bring the price close to our target range of $1,200-$1,800.
If we take a look at the daily chart for BTC/USD, we can see that it has just broken below a small rising wedge. The trend line support for this wedge could be tested as resistance if the price rises higher but we do not see it happening. The purple line on the chart corresponds to a strong resistance level on the weekly time frame. The price has closed below this level for the past two weeks even though it managed to rise above it before the weekly close. Bitcoin (BTC) is at an extremely vulnerable point. It makes no sense to see why anyone would be buying or holding at current levels expecting further upside. Certainly, the price could rise another 10% or even 20% from here, but is it really worth it? Investing is all about risk/reward and the risk reward here is just not worth it.
There are so many catalysts that could bring the price down. There is the Tether/Bitfinex controversy as well as the US government getting ready to crackdown on cryptocurrencies. President Trump recently tweeted criticizing Bitcoin (BTC) among other things. Some people take this as a bullish sign which is completely beyond my comprehension. All it is going to take is shutting down one big exchange like Bitfinex and then the show will be over before anyone can sell. There is nothing wrong with investing in Bitcoin (BTC) or other cryptocurrencies but we need to be aware of the risks and what the right time to buy and sell is. In every market, the simplest thing to do is to buy low and sell high to make money. If you do the opposite, you will get the opposite results.