- Bitcoin is now in a downtrend after Friday’s technical reversal.
- Analyst Peter Brandt believes that a cleansing is in order before bitcoin can start a new bull market.
- He says investors who refuse to be shaken out by the stomach-churning purge could reap ridiculous profits in the future.
The world’s dominant cryptocurrency appears to have lost all bullish steam. The momentum that the bitcoin price generated when it printed a 2019 high of $13,880 has vanished, giving way to a rapid downturn.
This week, the cryptocurrency crashed through support at $7,400. This triggered a technical reversal on the daily chart. As much as I hate to say it, the bitcoin hater, Peter Schiff, finally got it right.
A head-and-shoulders structure is one of the most reliable reversal patterns in technical analysis. Thus, from a technical perspective, bitcoin is now in a downtrend, and many expect that it would plummet to $6,000.
For instance, Clem Chambers, CEO of ADFN and Online Blockchain Plc, predicts that capitulation will strike at $6,000. He told CCN:
Bitcoin is entering a capitulation phase as you can more easily see when you remove the recent dump and bump from the chart.
Peter Brandt: ‘The Bulls Must Be Fully Purged’
Nevertheless, Peter Brandt says that bitcoin bulls will likely face an even worse scenario, at least in the short-term. The analyst predicts a move below $6,000, which would usher in an extended bear winter.
Even though bitcoin’s fundamentals have been making numerous advancements, Brandt says that a strong buy signal would only come once the Crypto Twitter bulls have all but disappeared. A thorough cleansing might be required to jumpstart a full-blown bull market.
Once the nightmare is over, Brandt expects that bitcoin would be ready to soar to $50,000.