Will bitcoin crash to $1000 dollar like some suggest?

* I'm not a financial advisor. Nothing that I write is financial advise. Trade on your own risk.

Hi,

Let me start by the following:

1. You are looking at the weekly bitcoin chart.
2. I'm analysing bitcoin based upon technical analysis.
3. Obviously I don't know the future and technical analyses is only a tool, it does not guarantee anything.

Having said that, do I think that this is the bitcoin crash everyone always talks about?

I've written 4 key points on the chart.

1. Hammer candlestick (This candlestick is formed by a small candlestick body and long thin line beneath that body)

The hammer candlestick is a candlestick which often indicates a reversal might be right around the corner. This kind of candlestick often forms after a big down trend and shows that the price of an asset went very low but couldn't sustain those low prices.

Why is that? Well, in these cases the selling pressure far exceeds the buying power at first but at some point the prices go so low that the buyers think they'll get a good deal and start buying and buying.

Selling pressure decreases since the people who wanted to sell already did and buying power starts to increase because more and more people want to buy the asset, in this case bitcoin, for those low prices.

These are often the moments that the momentum makes a shift and goes the opposite way.

2. Higher lows (The first thin line is lower than the second thin line).

Higher lows are a reflection of the fact that buyers are prepared to pay increasingly higher prices for the asset of choice and sellers are increasing their ask price.

As the buyers see that the price is going higher and higher they will make an attempt to buy the asset as fast as possible before they are to ''late''. This will often result in a buying frenzy which makes the price go up.

This proces is the thought behind the higher lows candlestick formation and why it often indicates a shift in momentum.

3. Very strong psychological support area of 10k.

I could write a whole post about support/resistance levels explaining what they are and why they are important but i'll try to keep it simple. Support levels are certain price points where a lot of people start buying the asset because they think it's a bargain.

This results in a lot of extra buyers which often prevents the prices from going below those support levels. Simply because of the fact that there is more demand dan supply.

Since bitcoin has a lot of trouble going below the 10.000 dollar for a second time we can assume that 10k is a very strong support level.

Why do so many people think that 10.000 for 1 bitcoin is a good bargain? I don't know since I can't speak for all but I can imagine that some people think it's cheap since it's 50% cheaper than a few weeks ago.

If enough buyers keep buying,ultimately the selling pressure decreases and buyers need to increase their bid to attract new sellers. This often results in the start of a buying frenzy since everybody sees that the price is going back up again and don't want to be ''left behind''.

4. 20 weeks EMA line.

I normally don't analyse weekly charts since i'm a day/swing trader so I didn't know which exponential moving average I needed to use but i've figured it out. The way I did this is simply testing which ema line has provided the most support in the past.

I came to the conclusion that the 20 WEEKS ema line proved to be the best choice and compared that line to the current prices and voilá. As you can see the 20 EMA line, yet again, provides support and bitcoin has trouble going below it.

Conclusion

So there is a lot of support at these levels.

If this support holds long enough it's quite possible that people will start buying again because they now believe that the price won't drop any further. If enough people do that, we could see another bitcoin rally.