Bitcoin’s Future Retrenchment – Where Is Support?

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Last Updated on 23 March 2021 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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Bitcoin broke through $34k this weekend and then fell as much as 17% the day after, to the joy of some in classic financial media. Although we’re all hoping for $40k or even $50k next, this is pretty much the moment where we have to take a step back and admit: this is going a bit fast.

Given Bitcoin’s historic track record of rallies, crashes and panics and the fact that, unlike the stock market, there are no built-in circuit breakers, a fall is almost certain to follow the steep rise that we’ve seen in the past three weeks. Bitcoin only broke through $20,000 on 16 December 2020.

Thus the question that must be posed is: where will eventual retrenchment finish? Where is the support?

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Bitcoin crashes and bubbles

Firstly, crypto supporters claim that this time round it is different from 2017. Because of the lack of ICOs, there are less chances for scammers.

Critics could say that these have been replaced by hacks via flash loans and food coins in DeFi. For all the popularity of the DeFi marketplace, one must admit it has come with a certain amount of scams.

If the cryptosphere would like to be taken seriously by the global financial world, it has to address these issues. The main players (Vitalik Buterin, Justin Sun, Charles Hoskinson, Charlie Lee, Changpeng Zhao, Brian Armstrong, Anthony Pompliano and many others come to mind) might do well to get together and establish some ground rules.

The fact that Dogecoin is being allowed to rise on the back of a social media call to “all get rich” is not exactly laying the groundwork to attract new institutional investors of course.

Secondly, crypto supporters claim that both Covid-19 and the first world governments eagerness to turn on the printers is what has forestalled Bitcoin’s rise in 2020 (and 2021 so far).

It provides with hedge against inflation and will thus allow Bitcoin to rise as fiat currencies fall.

All that may be so, but a rise from $20,000 on 16 December until $34,000 on 3 January might be a bit too much for a coin that one day wishes to serve as a stable means of payment.

16 December

Lastly, although I do believe that this time it’s indeed different from 2017, there is an important detail to remember. The last time Bitcoin rose to near $20,000 was on a similar date, namely 15 December 2017. Exactly one week later the coin started dropping again.

As we’ve established, and most traders agree at this point, that retrenchment has to come, the question must be asked: where is there support? Until what level can Bitcoin drop back before it rises again? When will panic set in if it happens, when it happens.

Working with the long term theory of investing that past resistance becomes future support, that 15-16 December date does seem to pop up already twice in our story, and thus $20,000, a level touched on 15 December 2017 as a high and that start of a crazy rally on 16 December 2020 looks like a good starting point.

Expect buying whales to lie in wait around that level when Bitcoiners start cashing in their profits at a certain point which we all know they will if crypto’s favorite coin fails to break a new record in the coming days.

BiancoBlue / Depositphotos.com