Which scenario is now the worst for Bitcoin? An analyst explains

Crypto analyst Rekt Capital tried to answer the question, "What's The Worst Case Scenario For Bitcoin Right Now?" in his latest video, published on December 21. Bitcoin has lost over 11% since it reached a new high of $108,374 on December 17.

At What Low Price Level Can Bitcoin Go?

Rekt Capital came up and explained it with an emphasis on weeks 6, 7, and 8 being critical within a “price discovery uptrend.” He highlighted that there is a strong correction bias and each of these particular intermissions could decline by up to 34% or deeper, referring to previous cycles such as 2013, 2016-2017 and 2021.

"Knowing these weeks is important because they are often troublesome for Bitcoin," Rekt Capital said, referring to prior cycles where the decline did indeed occur during this time. It was during week 7 of the 2013 cycle that Bitcoin plummeted by a sharp 75% within 13 weeks. The repeat vulnerability during these specific weeks was further evidenced by a 34% drop over the 2016-2017 period in week 8.

The price of Bitcoin has retraced by more than 10% as of the current cycle, and it has entered a historically significant support zone at $96,537 on the weekly chart. With the statement, "This area of historical support has enabled the move to $108,000," Rekt Capital underlined the importance of this support level. He issued a warning that if this support is not maintained, there may be a more drastic fall downward to $89,830.

Rekt Capital noticed the formation of a bearish engulfing candle in the weekly period after analyzing the price action in the past few days. This is a technical indicator often associated with possible reversals. He added, "We're losing resistances that became support." Since the price cannot support the upside, the loss means that there is an incoming correction.

Other formation highlighted by Rekt Capital in his study include holding at the 5-week technical line as well. He said, “There is rising evidence that we might be getting towards the corrective stage if this 5-week technical uptrend and that orange trend line is breached.”

He also mentioned the CME gap between the $78,000 and $80,000 price levels, which is an important area that has not yet been filled. "Entering 26%, 27%, and 28% dips can fill the whole CME gap," Rekt Capital said. With all these warning signs, still, Rekt Capital stands optimistic about the long game. "These pullbacks are what make for future uptrends in the parabolic phase of the cycle," he went on to explain, exemplifying through past cycles exactly how corrections have historically left the market needing the very "breather" for recovery.

For instance, in the 2021 cycle, bitcoin was 16% lower in the sixth week and 8% lower in eighth week still the actual trend is up. Likewise, while the current 10% retracement level holds the price action importance, it could be only the onset before the subsequent price discovery phase.

Bitcoin was at $95000 by the end of the time of writing.

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