Bitcoin Crash 2021: Moon Or Doom? Take A Look At These Charts

Summary

• I expect Bitcoin to break down soon and settle below $20,000.
• However, you can also make a bull case from the charts. Examine both viewpoints before making up your mind.
• From a TA perspective, bulls expect the current chart development to turn into the classic W form.
• If you're a bear but Bitcoin starts to rally, jump on DeFi with lower exposure where you can catch the upside beta without the capital risk of going all in.
• It's a trader's paradise, but noise trading is an extremely difficult and costly game and an easy environment to dissipate your capital.

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As anyone who has read my recent Seeking Alpha articles will know, I am a bear and expecting Bitcoin to end up below $20,000 with a crash low anywhere between $8,000 and $13,000.

I’m not a long-term bear, I’m a strong long-term bull if you call expecting another huge rally around 2024 a long-term bull stance. Short term, and even medium term, I’m expecting Bitcoin to settle below $20,000 for a long time.

Right now, however if you take an unbiased eye to Bitcoin, you can also make a bull case from the charts, and it does well to examine both viewpoints before making up your mind.

My mind is made up because I expect Bitcoin to breakdown soon for its final leg down; like this:

This is the most drastic what-if:

And a less drastic one:

These are just levels of what a bear would expect the low to be on a second leg of a crash and where I’m expecting Bitcoin to go, though perhaps with plenty of volatility along the way to make the journey a typically wild ride.

The bull case is strongly held of course, with many singing it every day. Like the price, it has held up well against a background of a grinding collapse that will have lost many huge sums they could ill afford. They are right in the long term but just not in the near and medium term. From a technical analysis point of view, they expect the current chart development turning into the classic W form you will see time and again in post-crash and post-correction charts. A W bottom is far more common than the V shape we have seen with the Federal Reserve’s rescue of the economy and stock markets with its huge money printing. A recovery for Bitcoin would look like this:

With the Bitcoin astronauts expecting this to go on to a moon shot like this:

So, the settlement of the Bitcoin bull and bear struggle will highly likely follow one of these paths and you can test your stance against them. The novice investor or trader puts much store about being right where in reality it is about making money, and this is more about following what is happening than predicting unknowable future events. By having scenarios already plotted out you can imply what is going on behind the scenes rather than call outcomes before they get under way.

For a bear, what might they do if Bitcoin starts to rally? Jump in against their best judgement or sit on their hands and bemoan their fate? The answer is jump on DeFi with lower exposure and ride their ultra-beta to catch the upside without the capital risk of going all in. I do not expect that to happen, but I will trade any bullish trend if it were to develop.

Make no mistake, DeFi tokens will be absolutely crushed if the bear scenario pans out as I expect, and if they are it will be an amazing opportunity to buy the future giants of crypto for next to nothing.

Meanwhile for the trader this is trading heaven. However, as many find out, noise trading is an extremely difficult and costly game and an easy environment to dissipate your capital.

My strategy remains: wait for a final leg down and then begin to dollar cost average back into crypto for the long haul to the next ‘halvening.’

The bear in me awaits the capitulation and I can’t see that being far out now. Yet the market doesn’t care what I think so I instead make these road maps to gauge which thesis is coming to pass.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have incidental amounts of BTC, Ethereum and a host of other coins, tokens and NFTs. I am not short of any crypto at all.