The Bitcoin (BTC) price is once again under pressure, which is sharpening the discussion about the sustainability of the current market cycle. According to well-known trader Peter Brandt, the market is heading for a bear market. Signals have appeared on the price chart that in the past often preceded major declines.
Bitcoin price breaks out of parabolic trend
The American trader and veteran analyst warns that Bitcoin’s parabolic upward trajectory has been broken. In a post on X, Brandt states that similar breakthroughs in the past led to significant corrections of 80 percent.
He does not think it is inconceivable that BTC falls towards $25,000, which corresponds to an 80 percent drop from the peak of $126,000 earlier this year.
According to Brandt, Bitcoin bull markets exhibit a pattern of “exponentially diminishing returns.” After each halving, profitability is lower than in the previous cycle. Often these periods end in a sharp, parabolic rise that suddenly collapses, and the current cycle appears to be following that same path, according to the analyst.
Brandt’s warning echoes previous market cycles. After the all-time high in November 2021 of over $67,000, Bitcoin fell below $16,000, a correction of 76 percent. In 2017, the price peaked at about $20,000, followed by an 84 percent drop to about $3,200.
It often takes a while before the bottom is reached: both after the peak in 2017 and in 2021, it took about a year for the market to find its bottom.
The increase in this cycle was also initially spectacular. In October, BTC hit a new record high of $126,000. After a sharp correction in November to around $80,000, the price bounced back to $94,000. But the Bitcoin price is now trading lower again, around $87,000.
According to Brandt, it may take some time before Bitcoin reaches record highs again. In November, he indicated that he did not expect the currency to reach the $200,000 mark until 2029, a clear contrast to other analysts who are already expecting new peaks this year.
Still a bottom in sight?
No one knows for sure whether BTC will ultimately experience an 80 percent decline. However, according to analyst Jelle, there is hope. Based on his technical analysis, a bullish divergence appears to be forming on the three-day chart. This means that although the Bitcoin price makes lower bottoms, the Relative Strength Index (RSI) indicator actually shows higher bottoms.
The RSI is a technical indicator that measures whether an asset such as Bitcoin has been overbought or oversold. The development is a signal that in the past has often preceded important reversals. This pattern also appeared at the two previous major bottoms in the cycle, which, according to Jelle, may indicate an impending recovery.
Source: https://newsbit.nl/veteraan-analist-peter-brandt-waarschuwt-bitcoin-kan-80-kelderen/
