Bitcoin was on a massive tear and the parabolic run was unstoppable as the crypto reached $13,000. It has declined since but is up on the weekly timeframe. While many long-term investors are euphoric over this juggernaut ascent, some experienced traders are starting to feel anxious. The trend reversal is so strong that a significant retracement is currently lurking. One popular day trader has a resounding argument that supports this bias.
Analyst Opinion on Bitcoin Pullback
A respected figure in the CryptoTwitter community named Trader X0 who boasts 13,000 Twitter followers looked at bitcoin’s daily chart and saw a striking similarity between the 2017 disbelief rally and the recent parabolic rampage. On June 23, the analyst shared his thoughts on Twitter to show the possible area where the leading cryptocurrency might correct.
According to the trader, bitcoin went above the range high of $12,000 as the possible last leg up. This is in line with the 2017 disbelief fractal that pushed bitcoin from $5,000 to nearly $8,000 in a couple of weeks (labeled as 3 and 4 on the left-hand side of the screen).
The analyst also said that this would “wipe out early shorts.”
Market structures from the 2017 bull run and the most recent reversal look eerily similar:
As of this writing, Trader X0’s playbook appears to be working in perfection. Bitcoin rushed past resistance of $11,600 and went as high as $13,868 before retracing. More importantly, the move liquidated tons of shorts as the trader predicted.
Twitter account REKT tracks all liquidations. A quick look at the account reveals the tremendous number of shorts getting liquidated by bitcoin’s move above $12,000:
Bitcoin Appears to Follow the Script After Correcting
While the king of cryptocurrencies rose to a fresh yearly high in recent days, the pullback to below $11,000 was swift. Consequently, the daily candle had a long wick above its body two days ago. A closer look at Trader X0’s chart and you will see that the peak labeled as “4” on the left-hand side of the screen has a candle with a long wick on top of the body.
Therefore, if bitcoin fails to convert $12,000 resistance into support, we might see Trader X0’s fractal come into play. Should that happen, the analyst sees the cryptocurrency plunging to $7,800 levels for a 40 percent drop before starting a monster bull run.
More Analysts Are Recommending Caution
Trader X0 is not the only figure that’s anxious about the current parabolic run. Trader Mento warned followers to keep their eyes open because bitcoin’s chart looks insane.
Parabolic runs like this one tend to be unsustainable:
Also, an active day trader who uses heavy leverage, SalsaTekilla, tweeted that the dump from the top will be “very quick.”
SalsaTekilla issued the warning after posting a tweet that indicates the levels where bitcoin is currently correcting. The levels were aligned to Trader X0’s resistance. The chart also noted that the areas between $12,700 – $13,000 are institutional order blocks. In other words, these are the price areas where institutional money started to dump positions.
Trader X0’s prediction of a 40 percent drop before the proper bull run remains valid as long as bitcoin fails to convert $12,000 resistance into support. Nevertheless, with more traders expecting an even deeper correction than what we’re currently seeing, we might very well see Trader X0’s fractal play out.
Last modified: March 4, 2021 2:37 PM