Last week, the cryptocurrency market valuation was cut in half in less than 48 hours, wiping out over $100 billion value.
The catastrophic collapse, however, could be the final shakeout before “moon,” according to one crypto analyst who bases the theory on the fall acting as a retest of downtrend line support – support that has held strong.
Cryptocurrency Market Loses Half Its Value in 48 Hours
The cryptocurrency market, along with traditional markets, was a complete and utter bloodbath last week.
The Dow Jones set a record for its largest drop since 1987, and the total cryptocurrency market cap was cut in half in under 48 hours. Bitcoin itself fell from $7,200 to under $4,000 during this historic selloff.
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Investors are in a panic over the potential implications the coronavirus will have on daily activities, the economy, and possibly their health.
But any investors selling now, according to one cryptocurrency analyst, may end up being “dumb money” that sells the absolute bottom of the final shakeout before moon.
Shake out before Moon
I’m long term bullish and am willing to hold these shitcoins to the ground. Funny how a couple weeks ago everyone was bullish now i’m getting hate comments spammed on my channel.
Sentiment has shifted and dumb money panic sold the bottom. Rinse & Repeat pic.twitter.com/rWst9HxhVX
— D.I.Y Investing (@vajolleratzii) March 15, 2020
On the total cryptocurrency market price chart on high timeframes, a massive breakout of downtrend resistance occurred in late 2019, causing a powerful rally that led most cryptocurrencies to gain 50% or more in less than two months.
Horizontal resistance and a spillover effect from the stock market and coronavirus concerns proved to be too much and caused massive selloff to a new yearly low.
However, that drop also fell back to the downtrend resistance line, where it is currently holding as support.
Bullish Retest of Downtrend Line, Could Be Launchpad for Moon Mission
If the line holds, this entire move, as bearish as it may seem, could be a bullish retest of the downtrend resistance line and the final shakeout before moon, as the analyst claims.
Breakouts of support and resistance are more often than not retested to confirm a flip from one into the other.
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A perfect example of this was during the historic China pump in late October 2019. While it was the third-largest single-day rise in Bitcoin’s history, it only confirmed overhead resistance at $10,500 as such, and the first-ever cryptocurrency set two lower lows after the two times reaching that level.
Neither Bitcoin and the total cryptocurrency market confirmed horizontal resistance as support after the breakout in April 2019. All this time later, that retest may have just happened. As can be seen on monthly timeframes, the total crypto market cap came back down to confirm the bottom accumulation range from back in December 2018, as resistance turned support.
If this line holds, just like the analyst says, it could have been the final shakeout before the cryptocurrency market cap takes off toward the moon once again.