A popular cryptocurrency analyst has suggested that the price of Bitcoin ($BTC) could drop to an $8,500 low as it navigates “uncharted territory” because of wider macroeconomic conditions affecting the cryptocurrency space and technical indicators.
According to crypto analyst Justin Bennett, as first reported by Daily Hodl, Bitcoin’s price chart has a bearish flag forming, suggesting the cryptocurrency’s price could plunge below the $10,000 mark in the near future.
In technical analysis, a flag is a price pattern that moves counter to the prevailing price trend seen in a longer time frame. According to Investopedia, it’s used to identify “the possible continuation of a previous trend from a point at which price has drifted against that same trend.” A bearish flag is a downward flag pattern.
Per Bennet, the bear flag is pointing to “just above $8,000” at $8,500, suggesting BTC could have significantly more downside before the bear market is over. Drawing a trend line from the 2017 high, the analyst says, also suggests a move below the five-figure mark. He said:
If we draw a trend line off of the previous cycle peak, off of this high back here, you can see that we do get an area between $8,000 and $9,000. Now I realize that this trend line is not all that significant. However, what I do find interesting is the fact that BTC has every single cycle put in a trend line similar to that.
Per the analyst the cryptocurrency space is navigating “uncharted territory,” as in other bear markets, wider macroeconomic conditions were bullish and equities were in an uptrend. Now inflation is at 40-year highs and the Federal Reserve is hiking interest rates to bring it down.
The analyst added that the “world is facing a recession” and crypto “has never been through a global recession” as it was created after the 2008 financial crisis. He added:
Anything that you think you know or anything from previous cycles really needs to be thrown out the window or reevaluated significantly. Because again this is unlike anything we’ve ever seen
As CryptoGlobe reported, the Bitcoin network has recently surpassed a massive milestone, with users on it having created over 1 billion addresses since its launch over a decade ago. The milestone comes amid an ongoing bear market that has seen BTC drop below the $20,000 after hitting a new all-time high above $69,000 late last year.
It’s worth noting that one address does not necessarily equal one user on the network. Every Bitcoin network participant can create as many addresses as they please, and some experts advise users to do so to boost their privacy on the network.
On the other hand, some addresses hold funds for potentially thousands of users as they belong to cryptocurrency service providers. Crypto exchanges, for example, often hold users’ funds in addresses with large amounts of funds so they can be securely stored offline.
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