According to Fairlead Strategies’ Katie Stockton, the downturn in Bitcoin which began in late 2021 will not end soon. A’major drop’ could take at least seven more months.
Fairlead’s Katie Stockton explained that bitcoin has experienced a negative shift of price momentum over the short-, medium-, and longer-term time frames. Bitcoin has declined since last week’s failure to test its 50-day moving mean near $17,400. It is now trading at $16,883.
“Short-term momentum has turned negative, which supports an bearish near-term bias.” She said that she expected a retest at the November lows (near $15,600) in the next few weeks.
Stockton believes bitcoin could fall further and slip below its November lows to near $13,900 long-term support. This price drop could lead to a potential downside of 18% compared to current levels.
She stated that despite long-term momentum remaining strongly negative, bitcoin will eventually make a lower low. This increases risk to long term support near $13,900. The 2019 peak is the end of her prediction.
Given the devastation that the crypto market has suffered in 2022, such a drop may not surprise investors. Investors have been exposed to the risks of crypto markets through various implosions, such as Three Arrows Capital and Terra/Luna Stablecoin.
Now, investors have to deal with the fallout from a lack trust in the sector and increased regulation by Congress. However, Stockton doesn’t seem to care, particularly when you consider high interest rate and tightening financial circumstances.
Instead, she concentrates her analysis on the prices and not the fundamentals. The prices suggest that bitcoin won’t see a major low until the middle next year.
Stockton stated that the DeMark Indicators are a good source of information about major lows. They are approximately seven months away from showing a counter-trend signal.
Technical analysts use the DeMark Indicators to measure supply and demand for a security. They have been proven to be able to identify important price inflection points. Many strategists on Wall Street use the DeMark Indicators, including Fundstrat’s Tom Lee.
Stockton will monitor various resistance levels like the 50-day moving mean to determine if bitcoin moves higher despite Fairlead’s bearish outlook.