Why a 30% Bitcoin price crash should not catch you off guard right now

0

The Bitcoin price rally halted the moment Joe Biden was announced as the projected winner of the 2020 United States presidential election during the weekend, with the price dropping from $15,500 to $14,400.

However, Bitcoin is still continuously showing strength as it’s once again facing the final resistance zone at $16,000.

This final resistance zone is the last major hurdle before a potential run at a new all-time high. However, a pullback is becoming increasingly likely, with the Fear & Greed Index currently at levels similar to the peak high in the summer of 2019.

The weekly level at $16,000 likely big resistance

BTC/USD 1-week chart. Source: TradingView

The Bitcoin weekly chart shows the $16,000 level as the final resistance zone before a new all-time high can be tested.

The weekly chart also shows support levels if the price of Bitcoin starts to correct. A correction would be relatively healthy if it flips previous resistance levels to become new support.

If a correction occurs, the weekly level of around $11,600 to $12,000 should be watched as a potential support zone. Such a correction would mean a drop of approximately 30% for Bitcoin’s price. A correction of 30% is quite normal, as this happened a few times during the previous bull cycle in 2017.

“Extreme greed” similar to summer 2019

The Crypto Fear & Greed Index is a useful indicator to measure the current market sentiment. In extremely depressed periods, the index uses the color red to mark the overall sentiment.