Forex and Crypto News

If Bitcoin doesn't rise above $11500, it will repeat the March collapse

16:11 15 September /2020

In everyday life, we rarely hear the mysterious word - fractal, but we encounter it every day. In the language of mathematics, a fractal is a set with the property of self-similarity. In other words, each member of the set is an exact or approximate copy of a part of itself.

In our case, fractal analysis suggests a possible repetition of the March price behavior of Bitcoin, when the price collapsed from $10000 below $5000. There is a close similarity between the two fractals, which means that if the scenario repeats itself, then the price of Bitcoin may fall below $10000.

The current situation on the chart speaks to something completely different. In 24 hours, the price of Bitcoin was able to rise closely from the $10250 area to the $10900 mark. However, the price has not yet overcome the $11500 mark, so a downside scenario may still happen. The current situation can be viewed as attracting players to the market with the aim of further decline.

The chart below shows the price of Bitcoin for a given period on September 14, 4:00 UTC.

FotoJet.jpg

According to Wyckoff's first law, the local peak has not yet been reached. That is, demand does not exceed supply. Wyckoff's First Law suggests that the excess of demand over supply leads to higher prices since there are more buyers than sellers. But in a situation where there are more sales than purchases, and supply exceeds demand, this indicates a further drop in value.

But according to Wyckoff's Second Law of Accumulation, the difference between supply and demand is not a coincidence. Instead, they reflect preparatory actions resulting from certain events. In Wyckoff's terminology, the accumulation period (cause) ultimately leads to an uptrend (effect). In turn, the distribution period (reason) provokes the development of a downtrend (consequence).

Based on supply and demand, Bitcoin demonstrates Wyckoff's accumulation law #2.

According to the chart, the $11245 level is the local peak at which demand will exceed supply. Therefore, approximately in the region of $11500 - $11600, we will see an increase in demand, and, accordingly, an increase in prices. At the same time, the $11200 level will act as the first resistance line before the local top. And if the price hits the aforementioned local highs, we can expect the price to collapse - similar to the March collapse.

However, it is worth noting that one of the main catalysts for the March decline in the price of Bitcoin was the pandemic. Hence, it is safe to say that the price of Bitcoin will not fall as low as before. The price bottom could be around $8800, much less than the CME gap, which ranges from $9645 to $9995.

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