Analyst who predicted Bitcoin’s top targets to drop to $ 16,000

Key points to remember

  • The price of Bitcoin has fallen more than 10% since the start of the weekly trading session.
  • A daily close of less than $ 44,000 could result in significant losses.
  • Famous technical analyst dave the wave is forecasting a downtrend towards $ 16,000.

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Bitcoin may have confirmed that it has entered a bear market following a recent rejection of the $ 49,000 area.

Bitcoin enters a bear cycle

Bitcoin started the week in a bearish mode after nosing 10% since the market opened. The major cryptocurrency lost nearly 5,000 points, going from a high of $ 47,250 to a low of $ 42,490.

While a daily close below $ 44,000 would confirm a full reversal, an analyst known for calling Bitcoin’s price activity believes more losses are on the horizon.

The chartist operating under the pseudonym dave la vague predicted in January, Bitcoin would peak at $ 70,000 (it hit around $ 64,000 in April and had lost more than half of its value by mid-July). Now dave the wave maintains that BTC has entered a new corrective phase.

The trader shared a detailed blog post claiming that BTC price action moves in the form of cycles that turn into a “random set of mini fads and subsequent fixes, ones that increasingly decrease volatility. and in turn lead to the discovery of prices “.

Source: TradingView

Following the recent rejection of the asset from the $ 49,000 resistance zone, the technical analyst predicted that BTC could dip towards the 200-week moving average, which sits at $ 16,000, in the coming months.

Network activity drops

As MicroStrategy and El Salvador have added to the buying pressure behind Bitcoin with recent purchases, the downside potential may be capped. Still, network activity suggests that retail investor interest may wane.

The number of daily new addresses joining the BTC network has hit a series of lows over the past two weeks. Around 436,000 new Bitcoin addresses were created at the peak on September 16, compared to 463,000 new addresses created on September 2.

Bitcoin network activity
Source: IntoTheBlock

The continued contraction of the network can be seen as a pessimistic signal as it shows a decrease in user adoption over time. Network growth is often considered one of the most accurate price predictors. As exponential network growth tends to pave the way for bullish price action, a prolonged period of network shrinkage may indicate that prices are on the verge of falling.

Until the number of new daily addresses being created on the BTC network increases, the outlook should remain bearish.

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