In the last 24 hours, the cryptocurrency market has shed over $200 billion in capitalization. Bitcoin price shed over 20% from the new all-time high. Binance Coin jumped to the 3rd most-capped thus displacing Ripple which has fallen out of favour in the current bullish trend.

Government Stimulus, QEs and Institutional Adoptions trigger a massive Crypto run

After rising over 1400% since March 2020, over 400% since the end of 2020 Q3 and 77% in 2021 prior to the current fall, it is very much expected that the flagship crypto will shed some profits. The massive rally since March 2020 came as investors adopted Bitcoin as one of the global safe-haven instruments. In a period of endless systematic helicopter money from the Central Banks to absorb Covid, investors looked for an alternative. Gold used to be, but Bitcoin is now more preferred if investors’ appetite in recent months is anything to consider. Since March, there has been massive adoption from institutional investors like never before.

Elon Musk is one of the most notable big guns after announcing a $1.5 billion Bitcoin purchase. The second richest man in the world also said his companies now accept payments in Bitcoin. Mastercard and other payment outlets have Bitcoin incorporated into their business. Also, very important is that the former obvious naysayers are now either adopting cryptos or sitting on the fence. The negative comments that drove the 2018 bearish phase have drastically reduced. Thus, the positivities drove the premier crypto to an astonishing height at over $58,000 with over $1 Trillion in market cap prior to the week.

Ethereum and Binance lead the altcoin race

The Bitcoin massive surge is rubbing on most of the major altcoins. Ethereum, the second-largest crypto, shattered the previous $1,400 all-time high. Last week, it peaked at $2,070 on Bitstamp. Litecoin, although still lagging behind the $380 all-time high, gained nearly 900% since March. Cardano, Polkadot and Binance have now joined Ethereum at the top of the market cap table. Binance is one of the few Altcoins to have hit a fresh all-time high. The 2700% surge from March has lifted the crypto to 4th on the market cap table just after Ethereum and Tether. As of last week, BNB touched $360. However, Ripple has dropped to 7th place on the table. The altcoin warriors in the 2016/17 bullish run like Ripple, Bitcoin Cash, Stellar Lumen, EOS, Bitcoin SV, IOTA etc, are now taking the back seat in the current run.

Why Bitcoin is retreating

After jumping to a fresh record high, the current week started on a bearish mood. Bitcoin dropped over 20% in the last 24 hours. The Altcoins have followed in this manner. Clearly, the current dip is a result of profit-taking. Traders and investors, who have made massive profits, are probably liquidating some of their positions. It’s a normal thing in investing. It however remains to be seen how deep the current dip would go. The last bearish correction happened in January with a max 31% decline from the $42,000 previous top. This week candle is currently showing red. If the red candle ends engulfing last week’s bullish candle, we might see a further decline in the first two weeks in March. March might therefore be the first bearish month since September 2020.

How deep could Bitcoin drop?

It’s difficult to predict the bearish move of the crypto market in this very bullish phase. But, if this week ends with a bearish engulfing candle pattern as the chart below shows, we can expect a further decline to $30,000.

As the chart above shows, a weekly bearish engulfing candle pattern in December 2017 preceded the 2018 bearish phase. Also, a weekly bearish hammer/pin bar candle pattern signalled the start of the June 2019 – March 2020 deep bearish correction. A bearish engulfing candles setup at the end of this week will most likely signal the start of the intermediate wave (4). If this is the case, we should see a bigger dip than January’s – most likely to $30,000.

However, if today’s candle declined the bearish engulfing pattern and BTC ends the week above $51,000, wave (3) could push higher to $70,000. This week’s candle is therefore important in helping to read the mass psychology of Bitcoin traders and investors.

Disclaimer: This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This communication has been prepared based upon information, including market prices, data, and other information, believed to be reliable; however, TigerWit does not warrant its completeness or accuracy. Trading CFDs involve risk and can result in loss of capital.

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