Bitcoin Faces 50% Drop Risk As Investors Compare Market To 2017 Bull Run

Tony Severino, a prominent figure in the cryptocurrency community, has cautioned investors against drawing parallels between the current Bitcoin market cycle and the historic 2017 bull run. This warning comes at a time when bullish sentiments for Bitcoin are surging. Currently, the Bitcoin price is consolidating within a narrow range, with $84,500 acting as a resistance level.

Severino's warning is based on the stochastic oscillator, an indicator used to determine whether an asset is overbought or oversold relative to its recent price action. When applied to the Bitcoin chart, this indicator reveals long-term trends dating back to 2013. Severino's interpretation of the indicator challenges the current market hype, where investors are seeing similarities between current levels and those during the 2017 bull run.

The stochastic oscillator is currently at approximately 60, a level similar to that observed during the correction phase of the 2017 bull run. However, Severino argues that this more closely resembles the beginning of 2018, a period during which the Bitcoin price experienced a nearly 50% drop within a single month. This suggests that the current bullish comparison may be misleading.

On-chain data further supports Severino's caution, indicating a reduction in buying momentum among short-term holders as Bitcoin consolidates. The realized price model suggests that Bitcoin's correction could extend for several weeks. Despite these bearish conditions, Bitcoin has shown resilience by avoiding a break below $80,000 and has rebounded above $83,000 following recent market volatility.

While Bitcoin's recovery above $83,000 hints at a potential decoupling from traditional financial indices, Severino advises investors to exercise caution. He warns against relying on historical analogies and suggests that Bitcoin may be entering a bearish phase. This contrast in sentiments underscores the need for a nuanced understanding of the current market dynamics.

Bitcoin commenced trading at $83,766, with a stable support level at $83,369. The initial movement was downward, but a golden cross at 00:50 UTC pushed BTC to $84,193. With the RSI nearing overbought levels, a death cross formed at 2:05 UTC, leading to a stable downtrend that took BTC back to the support level by 6:45. The oversold RSI validated a trend reversal, but the uptrend did not hold as a death cross at 10:15 caused it to crash below the support, sending Bitcoin to $82,389 by 15:40 UTC.

The RSI again entered the oversold region, leading to a price hike. An elongated uptrend formed, taking Bitcoin to find resistance at $83,706 by the start of April 6. In the first hour of trading that day, Bitcoin tested the resistance but failed to go above it. Consequently, a death cross formed, and the price faced correction. Bitcoin found support close by at $83,159. The coin attempted an upward movement, but the buying pressure failed to sustain the momentum. A death cross formed soon, and the trend reversed, with Bitcoin going on a downtrend breaking the $83,159 support level. As of the latest update, Bitcoin was trading at $82,996 after a slight correction.

Despite recent volatility, Bitcoin has continued to stabilize above $80,000. However, it touched $88,000 a few days ago, and a stable, slow downtrend has since formed. Bitcoin appears to be heading closer to $80,000, and it seems likely that it will abandon more supports before stabilizing above this level.