Markets are Puking on Bitcoin, Will the Bear Market Continue?

Markets are collapsing and Bitcoin drops under $26,000. What's next?

Written by: Michaël van de Poppe

In this update we'll talk about the recent crash on the markets. The crash took place during sleep hours in Europe, and resulted into the largest liquidity crash since FTX. Indicators are all showing red signals everywhere and are on the lowest levels since March '20. What's next? That's what we'll be discussing in this update.

The total market capitalization for crypto is on an important level. If we close beneath the 200-Week EMA, that's going to be a strong signal for further decline across the board of the crypto markets.

At this stage, we could still provide arguments that the markets are range-bound and that there could be a case of consolidation and sideways actions. Additionally, we're still making a higher low on the markets here, through which a confirmation can be provided that we're uptrending.

I know, it's still sad with the current market circumstances, but it's something that we need to be looking at.

What did we see additionally in the last massive crash?

The lowest point since the COVID-19 crash for Bitcoin in terms of RSI levels on the 12h. The lowest. On top of that, by far the highest amount of liquidations taking place since FTX and even larger than that event.

Ethereum also reached the lowest number on RSI here in the past five years on the 12-hour chart. The 4-hour chart also has shown the lowest number since 5 years and for Bitcoin it's also the lowest 4-hour RSI in the past 5 years.

That's showing the significance of this entire impact on the markets. It's showing a case where we massively drop across the board and markets are puking even more due to the high amount of leverage in the markets. Does that constitute to a potential bottoming procedure? It might. The markets are copy/pasting the movements of 2016 in that regard and then we need to stay above the last low at $24,800. This level we've barely held in the past 24 hours, as the markets have been correcting substantially.

What do we see on the altcoin markets?

Bitcoin dominance is still copy/pasting the previous cycle. Touched the 200-Week MA and EMA and is currently dropping from that previous high. What did we see? Exactly, we did see altcoins bouncing back up in the recent drop in their BTC pairs, even ETH/BTC started to rally back up.

This is very similar to what we've seen in 2019, where the correction started on Bitcoin (this might have ended here, but atleast, a correction started) and the final recktening on altcoins took place.

However, during this entire correction, altcoins started to wake up significantly in their BTC pairs and they were even bottomed. That shows that buyers are stepping in and that we could be surging whenever Bitcoin has found its bottom.

That's what we're looking at here again. We're looking at a comparison with that period. The heaviest pain might be over for altcoins and we could be surging relatively soon, if Bitcoin continues to chop from here. That would be great for the markets, and the sentiment, although the entire doom case is definitely still on the horizon.

If we look at Chainlink, we're back at the range lows. An area of interest, usually, but given the recent crash, the fear is going to continue from here and probably people don't want to get interested in this particular asset.

Understandable, but that theory is probably not going to be sufficient enough as you probably need to get yourself positioned when you feel the least comfortable of holding that actual position.

If we look at some other things here, we can look at the BTC pairs.

In that case, we can see a strong bounce on the BTC pairs in the recent drop of Bitcoin, through which the interest is definitely there for altcoins and that's comparable to what we've witnessed in 2019 on the markets.

Are we going to have a surge on the altcoins from here if Bitcoin stabilizes? It seems very unlikely, but it also seems very likely on the other hand.

The ETH/BTC pair did have a similar structure. It bottomed out in August/September of 2019. That might be a copy/paste here in this cycle where we didn't see that much pain coming around on the markets, and we actually had a surge of 40% from the lows on the ETH/BTC pair, while Bitcoin was correcting.

The fact that the ETH/BTC pair is showing strength currently, that's providing us intel that the markets might be turning around.

Stay safe!