Hi everyone,
Fear continues to permeate the crypto space, and it's not entirely unexpected given our recent journey. Over the past 3-4 months, we've been riding a wave of extreme greed, with every dip being bought up eagerly, and consistently breaking through previous all-time highs. However, it's essential to recognize that in previous cycles, corrections tended to occur around the time of the halving. Just before Bitcoin embarked on its parabolic run, and just before dominance waned, corrections were witnessed.
This time around, things are a bit different. The bull run commenced months before the halving, fueled largely by ETF hype. Interestingly, this hype proved to be justified as ETF inflows have been substantial and are expected to grow over time. Personally, I wasn't entirely convinced that buying pressure would surge so soon after the ETF launch.
Now, let's delve into what transpired yesterday. Bitcoin experienced a significant downturn, breaching the $62,000 support range, resulting in a hefty 20% correction from its peak. As we continue to navigate within the downtrend, it's crucial to note that since 2022, we've already weathered five corrections of around 25% from local tops.
Moving forward, I see two potential scenarios:
Scenario A: Similar to previous correction stages, we undergo a period of consolidation lasting a few weeks. This consolidation phase triggers fear among investors, prompting the last remaining laggards to sell off their positions. Subsequently, we break out of the downtrend channel, consolidate beneath the local resistance (around $62K), before ultimately breaking out to revisit previous all-time highs.
Scenario B: Given the absence of strong local support in this range, we could see further downward movement, potentially dipping to the local support level at $52,000 while squeezing the downtrend channel. This could culminate in a final flush, diving below that range only to be swiftly recovered, accompanied by a surge in trading volume. Eventually, we break out of the channel and begin the journey to recovery from there.
On a historical note, after the 2012 halving, BTC witnessed a staggering x92 increase. Following the 2016 halving, it pushed a x30 increase, and after the 2020 halving, we observed an x8 increase.