If Bitcoin Repeats Its 2018 Drop, Here's How Low It's Headed

If Bitcoin Repeats Its 2018 Drop, Here's How Low It's Headed

Bitcoin (BITCOMP) traded back above $37,000 on Monday morning after another wild weekend of trading sent the cryptocurrency tumbling briefly below $32,000 on Sunday.

For now, it seems as though bitcoin prices have stabilized once again in the near-term. The crypto has been on a steady, downward, medium-term trend since mid-April, and some bitcoin traders are now concerned the rest of 2021 could start looking like 2018.

Deja Vu? 

Bitcoin prices are now about 41.7% off their all-time high of $64,789 in mid-April. If bitcoin repeats its 2018 sell-off in 2021, however, it could still have a long way to fall before it bottoms out.

Back in December 2017, bitcoin surged to an all-time high of $19,870. However, the bitcoin bubble burst shortly thereafter, sending the cryptocurrency tumbling all the way back down to $3,169 in December 2018. From peak to trough, the 2018 bitcoin sell-off represented an 84% drop.

If bitcoin repeats that performance in 2021, an identical 84% drop from the $64,789 high would put bitcoin prices in the $10,366 range. That level would represent another 72.5% downside from current levels.

Bitcoin bulls that see $10,366 as a ludicrous level to hit should also remember that bitcoin prices were under $10,000 less than nine months ago. In addition, bitcoin’s lack of clear inherent fundamental value means the cryptocurrency’s chart technicals are much more influential on price than the typical stock.

Technical trading is a bitcoin bull’s best friend during boom periods like 2020 and 2017, but it can be their worst enemy during a sell-off like the one that happened in 2018.

Benzinga’s Take

If the bitcoin sell-off continues in the weeks ahead, there is certainly one key support level to watch that is well above $10,366. When a stock breaks out to new long-term highs, previous technical resistance levels often transition to support levels, so bitcoin’s 2017 high of $19,870 could potentially serve as a key support level in 2021 if the weakness continues.

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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