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This week, Bitcoin price has reached a high of $ 19,500 – the highest level with 60% growth in the past six weeks. Since Bitcoin first hit above $ 12,000, within a 3-day time frame, there has been twelve consecutive green candle closes without any red.
The Fisher Transform has reached the highest reading in its history for the fourth time ever. | Source: TradingView
Bitcoin price has difficulty correcting
The extremely bullish push led to a particular technical indicator hitting its highest reading in history – just three times before, all before 2014. Each time, an average correction reduces 2/3 of the price of Bitcoin has happened after the last decline. Will a historic sell-off continue this previous unstoppable rally?
Past corrections suggest that cryptocurrency is about to correct hard. | Source: TradingView
Bitcoin price has almost doubled since the start of September, sparking an explosive rally driven by FOMO that has just come to an end. The market-leading cryptocurrency rose parabolically after rebounding above $ 12,000, and there was news that PayPal will support cryptocurrencies. But its inability to break its all-time high has made Bitcoin fall back hard to refuel.
The price increase has led to the Fisher Transform technical indicator one of the four highest readings in the history of more than a decade of crypto. Interestingly, a maximum deviation of 7.5 or more hadn’t happened since before 2014, back when few people even knew what a cryptocurrency was or had heard of Bitcoin. But looking back at previous examples can show that a perilous situation is underway.
In the first-ever Bitcoin bull market, the Fisher Transform indicator reached such extreme levels three times. For the first time, the asset heated up, leading to a 48% decline.
The second caused an 80% full pullback, and the third ever started the first Bitcoin bear market from 2014 to 2015 after an initial 64% drop. Now the signal is back, and by taking the average of the three corrections and extreme readings, it is estimated that around two-thirds could fall in the price per BTC.
Bitcoin bull market correction over the past cycle has averaged between 37% and 38%. In the first bull market, the average is close to 64%.
The two bull market corrections could provide potential targets for places where any price drop is reversible. The first of the two targets is right where the bullish breakout takes place at $ 12,000.
Second, a 64% retracement will bring Bitcoin’s price back $ 7,000 per BTC. As extreme as it sounds, cryptocurrencies are known to over-develop in both directions. After the achievements of 2020, a strong move is likely.
The two targets’ midpoint is also a probable scenario, located around $ 9,200 and will fill one of the remaining CME gaps left on the Bitcoin futures chart. Whatever the end goal, successfully buying a sale is possibly the most profitable way to play in Bitcoin history.