Tom DeMark – a technical strategist – made headlines back in March when he suggested that bitcoin could eventually fall into the $18,000 range. At the time, bitcoin was trading for about $48,000 per unit.
Tom DeMark on the Bitcoin Crash
Strangely, it appears DeMark was right as a few weekends ago, the world’s number one digital currency by market cap did fall to $18,000. It even managed to go lower, and for a short while, the currency was trading for around $17,500. Since then, the currency has shot back up into the low $20,000 range, though DeMark is confident that lasting damage has been done.
He says the recent crash has taken bitcoin below the 50 percent mark of its previous rally. BTC is trading for about 70 percent less than where it was in mid-November of last year. During that time, the currency rose to a whopping $68,000 – the highest it’s ever been. Sadly, with this new crash, he commented that long-term damage has been done that could take many years – even decades – to repair.
Typically, structural long-term damage is done to an uptrend when a retracement exceeds 56 percent. Such breakdowns speak of a high probability recovery to the all-time bitcoin highs will require many years, if not decades, to accomplish.
The crypto space has been experiencing massive losses as of late. What was once an industry with a market value of roughly $3 trillion has since fallen to just over $900 billion at the time of writing. The overall sentiment is negative, though DeMark offered some positive news.
He stated that while it may be a while before bitcoin reaches its peak price again, he commented that it’s not impossible there will be rallies along the way. Thus, traders could ultimately see bitcoin hit a price of anywhere between $40,000 to $45,000 in the coming weeks or months. He says:
This does not negate the prospect of up to 50-56 percent recovery over upcoming months which implies a bitcoin rally back to $40,000-$45,000… Since this was accomplished over a weekend and a seven-day chart, there remains modest risk of two lower lows and closes than Saturday levels next week. Regardless, once there is a close above the close four days prior following the next trading day with a higher high and close, the trend should reverse upside.
This Is Like the Crash of 1929
DeMark is basing his thoughts and predictions very much on how the stock market operates. In 1929, the stock market crashed, causing the U.S. to fall into the Great Depression. He commented that the stock market dropped below 50 percent from its peak, and that it ultimately took the market roughly 25 years to fully repair itself and do better than its 1929 high point.
He says with the recent bitcoin fall, we may see similar patterns occur in the crypto space.
Source: https://www.livebitcoinnews.com/tom-demark-lasting-damage-has-been-done-to-btc/