The trader Ilya Meshcheryakov explains the current market situation.
Bitcoin closed the past week down 20%, with $10bn liquidations of long positions. The altcoin market fared even worse — many coins shed 30-40% intraday.
When a new ATH is established, a sharp decline in several waves is often observed. Such situations are highlighted on the chart below in blue — the structure consists of three to four waves. This is explained by the large number of participants eager to take a long position at the most favourable price, without waiting for a reversal.
Red zones on the chart indicate potential zones for the next waves — below $50,000 and $42,000. Even upon reaching these levels, the uptrend would not be broken. The target of the breached ascending wedge sits at $37,500.
The greatest concern in the medium term is market sentiment: most retail investors are buying the dip in expectation of a quick rebound in prices. A few more waves or a sideways movement are possible.
The long-term outlook remains positive — a squeeze was expected due to large open interest in longs and breaching ATH. However, the trend has not yet shown signs of a reversal.
In the near term, a series of rapid moves in either direction is possible. A break of the $53,000 level is not ruled out, followed by a rise to $58,000. After that, the mid-term scenario is expected to unfold with a drop below $50,000.
The decline in recent days looks orderly. The high willingness of investors to buy the dip gives large capital plenty of room to unleash a series of surprises — including a deeper drop and a protracted flat.
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