Crypto Market Down Over 20%: Comparing This Correction to Others, and Pre-Halving Hype

Key Takeaways

• The Crypto Market Cap (TOTALCAP) bounced on April 13, reclaiming a lost horizontal support area.
• The March – April crypto market correction compares favorably in magnitude to historical ones.
• Due to the bounce and upcoming Bitcoin halving, can the market continue its resurgence?

The Crypto Market Cap has fallen since reaching a yearly high of $1.69 trillion on March 14. It created a lower high on April 8 and accelerated its decrease on April 12-13, falling 17% in two days.

Despite this precipitous fall, TOTALCAP has recovered admirably with an ongoing 13% price bounce. The bounce compels us to assess if the correction is over, or another downward movement is likely.

How Does it Compare to Previous Corrections?

Since the TOTALCAP upward trend accelerated in September 2023, the ongoing correction is the only one with a magnitude over 20%. Conversely, there were four such corrections in 2020 (red icons).

The biggest difference between the movements in the current and 2020 cycles is that in 2020 the corrections all occurred after the halving (yellow). While there was a 64% drop before it, it was part of a 260-day downward movement, rather than a quick and sharp dip.

Looking at the RSI movement, the current TOTALCAP correction most resembles that of February 2021 (green). This is because the RSI bounced at 70 (green icon) after trading in overbought territory for a long period of time.

Since the crypto market correction has continued for nearly a month, and the next Bitcoin  halving is expected on April 20, it is likely it is complete. This aligns with the possibility that TOTALCAP is further along in its cycle relative to its halving compared to the previous bullish cycles.

If the pattern holds true, TOTALCAP will initiate another upward movement that takes it above its all-time high of $3 trillion. Then, a significant and lengthy correction is likely, similar to the 55% drop in May 2021.

TOTALCAP Bounces After Correction

Measuring from the yearly high of March 14, TOTALCAP has fallen by nearly 23%. The shape of the decrease perfectly resembles a completed A-B-C corrective structure, where waves A:C had an exactly 1:1 ratio.

Also, the entire crypto market correction is contained inside a descending parallel channel, common in such structures. The wick lows of waves A and C (green icons) completely align with the channel’s support trend line.

Despite these positive signs, the completed correction is not a formality yet. This is because of the price action and RSI. Even though TOTALCAP bounced, it still trades at the channel’s midline. It has to reclaim it to confirm the correction is complete.

Additionally, the daily RSI is below 50 and its bearish divergence trend line (green) is still intact. A price increase above the channel’s midline and RSI increase above the trend line is required to confirm the upward movement.

If that happens, TOTALCAP can increase another 30% and reach the next resistance at $3.11 trillion. Conversely, a rejection from the channel’s midline can trigger a drop to its support trend line at $2 trillion.

Crypto Market Correction Over?

The ongoing correction is the first one over 20% in the current bullish market cycle. Due to the length of time, RSI reading relative to the previous market cycle’s correction, short-term price movement and the upcoming BTC halving, it is likely the correction is over.

About the Author

Valdrin Tahiri

Valdrin discovered cryptocurrencies while getting his MSc in Financial Markets from the Barcelona School of Economics in 2017. He has been an avid investor and trader since. Valdrin has written for several cryptocurrency media companies such as BeInCrypto and CoinGape.

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