Panic gripped the crypto market last week when Bitcoin broke below support, stable coins got rid of the dollar and THE MOON has dropped to zero. The bloody consequences left cryptocurrencies as a whole more sold than the collapse of COVID Black Thursday.
Here is a more detailed look at the historical pre-sale conditions in the crypto.
The total crypto market sold more than Black Thursday
It was bloodshed in Bitcoin, an apocalypse in altcoins. Even the stable coins tied to the price of the almighty dollar were completely shaken. An unscrupulous actor or group of actors strategically attacked the UST stable money dollar fixator, causing a domino effect of algorithmically driven liquidation of reserve assets involving BTC.
Bitcoin has fallen through support and many altcoins have achieved an overall decline of 80 to 90% or more. LUNA, UST-related assets, fell all the way to zero. Billions have been erased from the total market capitalization of cryptocurrencies. If there ever was a time doubt the future of cryptocurrencies, maybe it is now. However, veterans of the market recommend that when things become suspicious, you reduce the display.
The weekly RSI is more oversold than on Black Thursday | Source: CRYPTOCAP-TOTAL on TradingView.com
“When in doubt, reduce,” is the case. Comparing the recent cryptocurrency sell-off with Black Thursday, the weekly RSI reached even more extreme levels of oversold. Meanwhile, Black Thursday’s candle fell 50%, and the latest correction, by contrast, barely produced 30%.
By definition, hidden bullish divergence occurs when the asset price sets a higher lowest value and the indicator sets a lower minimum. This often indicates a move forward.
Elliott Wave Theory suggest the cycle isn't complete | Source: CRYPTOCAP-TOTAL on TradingView.com
Could another 45% collapse be ahead of us?
Elliott Wave Theory can give clues as to how the sequel might look ahead. Total crypto market capitalization is also traded within a parallel channel, whose bottom has only been touched. The upper limit of the canal is approximately $ 10 trillion.
While that fact may be the bulls of hope need it right now, the bears could still be the last to laugh. The weekly RSI has now reached the lowest level from the bottom of the bear market and the fourth lowest in its history on TradingView.
Only three other times has the total crypto market cap been more oversold | Source: CRYPTOCAP-TOTAL on TradingView.com
Of the three previous lows set at the weekly RSI, two were the bottom of the bear market. The remaining low, however, was followed by another 45% drop to the final bottom. A second drop of 45% from here would return the total market capitalization of cryptocurrencies to around $ 600 billion, or below the peak of the January 2018 cycle.
Simply put, the risk is still extremely high, but as resale conditions increase, so does the potential for reward. Act accordingly.
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Featured image from iStockPhoto, Charts from TradingView.com