Over the past week, Bitcoin (BTC) has finally managed to mount a comeback, rallying from the local low of $9,300 to $10,500 as of the time of writing this.

However, one analyst recently pointed out that this price action only confirms the idea that the cryptocurrency market may soon undergo another retracement — one that could bring the Bitcoin price down to the $7,000s for the first time in literal months.

Related Reading: Bitcoin Price Could Break Up From Multi-Month Bull Flag

Why Bitcoin Price Could Plunge by $3,000

Il Capo of Crypto, a trader, recently posted the tweet below, which shows gold’s price action (2-day chart) in 2012 to 2013 and Bitcoin’s price action (12-hour chart) from June to now.

As seen below, there are clear similarities between the two charts: a series of lower highs and higher lows, the assets retracing after their RSI reached “overbought” levels, and clear interactions with key Fibonacci Retracement levels.

In other words, the Bitcoin price is seemingly doing exactly what gold did back in 2012 to 2013, which was its peak in the wake of the Great Recession.

Capo writes that should the entire fractal play out, meaning BTC will soon lose support at ~$9,500, a drop to $7,200 to $7,500 — a key Fibonacci Retracement support — should play out. That would represent a 30% drop from the current level of $10,500.

Capo isn’t the only analyst currently expecting Bitcoin to potentially drawback further. According to Jack, the lead analyst at a trading and analysis group known as Bravado, the most likely scenario for BTC is for it to “bleed our way to $7,400 in a falling wedge” to bottom in early-November. He points out that BTC is clearly in a declining wedge with a downward-sloping wave backdrop, implying that further correction is entirely possible.

But while the fractal and technicals are pointing towards downward price action, fundamentals suggest that demand for Bitcoin should only be growing, potentially putting off any notable retracement.

Related Reading: Crypto Pundit Peter Schiff Says Gold Is In Early Bull Market, But Bitcoin Is a Sucker’s Rally

As reported by NewsBTC previously, Adam Back, the creator of the Proof of Work protocol that Bitcoin mining is based on, recently laid out a number of reasons why BTC is ready to appreciate greatly in the coming years. They are as follows:

  • The May 2020 Bitcoin block reward reduction from 12.5 to 6.25 BTC per block: In May next year, the number of coins issued per block (every ten minutes) will be cut in half, resulting in a negative supply shock to the Bitcoin market.
  • Geopolitical uncertainty: Venezuela has collapsed as a regime has managed to inflate away the local currency, leading to local adoption of Bitcoin and other decentralized forms of money. Argentina recently saw its incumbent president, Mauricio Macri, lose the primary election for the presidential seat, resulting in a collapse of the Argentinian peso and the local stock market. Hong Kong has been embroiled in massive protests, as China has been duking out a trade war with the States. These cases are only one of many that show that the world is unstable, and needs safe haven assets, be that gold or Bitcoin.
  • $17 trillion worth of negative-yielding bonds: On Friday, Bloomberg reported that the negative-yielding bond situation has just developed. Their report, which cites the Bloomberg Barclays Global-Aggregate bond index, shows that $17 trillion worth of bonds is negative-yielding.e.
  • Modern Monetary Theory (MMT) becoming a popular trend: MMT, which is effectively an economic framework that says governments should heavily utilize fiscal policy to boost their economy, has become a popular trend in global politics. Many critics of the theory say it will result in mass inflation, leading to an increase in the valuation of hard monies, like gold and potentially Bitcoin.

While some of these factors have yet to impact the cryptocurrency markets; the others have.

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