Taking into account the basic model of trend determination, lower lows and lower highs, we have a downtrend since BTC rejected 48K USD and left a new low below 28.6K USD. The new high of November 2021 becomes irrelevant. We can talk about crypto winter, at least price-wise.
We may have already seen the low of the bearish cycle. Or it may be months away. The most important thing is, as I have been commenting on previous occasions, to know what a trend change would look like, or how far we can expect to fall. The miners continue to accumulate, possibly waiting for better distribution zones.
It is difficult to know the optimal level. What does seem clear is that a capitulation by the miners could create a lot of downward selling pressure. At the moment it seems that the crypto-winter is more for traders than for miners.
Scenario A
Let’s start with a basic principle that I really like: “Old resistances become new supports”. Following this model, BTC would find its support after an 82% drop, at these levels:
We may need more confirmations to settle for this scenario: that clearly the previous support (summer 2021) is resistance and that the sales volume to redistribute strong and accumulate fast below are similar to early 2021.
If we respect the trend, it should not be bought until the marked resistance is broken.
The miners could add fuel to the fire if they start selling hard, if they start to capitulate. If they needed liquidity to cover losses, this scenario would gain supporters.
Scenario B
The 200-period Moving Average (200 MA) has been a good indicator to know when it is a good time to buy. If we see a new low it would be very likely to hit the Middle. Let us remember that, as in the case of gravity, “everything that goes up tends to come down” and in this case there is enough empirical evidence to think about that rebound.
As they say in mathematics, it is convenient to “fatten the point”, leaving buy orders a little higher and a little lower. It was so close that it could be the low.
Scenario C
We already had the low. And just think of it as a buying opportunity. Even if it has not changed the trend nor has it fallen with the strength it usually does.
The risk, from an investor’s point of view is lower. You would be buying in fear and in great decline. But let’s remember the strength and importance of the trend.
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