BTC Will Flash Crash to 35,000 / 8,000 - This is the Theory I’ve been seeing a lot of comments on my posts about this, discreting the idea, or claiming there’s no reasoning behind it. Here I will dive deeper into the WHY by presenting this on the weekly time frame.
In recent times, we have witnessed many times on a small scale what happens after we see a slow, downwards consolidation and price movement.
On the way days as shorts are accumulated, they leave a trail above the price that contains buy orders that don’t automatically fill if price is below. These buy orders are short stop loss orders and short liquidation orders.
As Bitcoin moves down, the price will then slowly begin to rise. Sooner or later, there is a high volume candle on the minute time frame pushing price up - into the series of short position buy orders.
What follows is a very fast upwards candle as these buy orders are filled and the shorts are stopped out, liquidated, and traders enter longs.
Think of this as a replacement of positions. The market makers use the traders own decisions, to get themselves into the positions they want to be in. They cannot make those choices, but they can manipulate and entice traders to make the wrong decision.
Market makers who allow traders liquidity to take leveraged positions, they want their money back and to an extreme lesser degree, don’t want you taking profit in a winning trade. Hence, we see these very fast moves occur, which were once known as “stop hunts”.
These stop hunt candles, extreme, fast price movements that liquidate and stop out trades by nature, can be understood by chart analysis.
If you read disclaimers for the heat map platforms (IE Coinglass), you’ll see that these are only predictions, and not based on real data. The only accurate way of understanding where these hidden orders are, is by chart analysis.
On my chart are red boxes. These red boxes are drawn from the upwards consolidation zones, where price never came down to reclaim the liquidity from. These zones are filled with long position sell orders that don’t automatically fill when price is above.
You can imagine a ladder of sell orders, one after the next, all the way down through the boxes.
Now you may think, how can Bitcoin lose all that value if we drop to 8,000 when there’s ETF’s, Strategy, Holders, etc?
The answer is - the majority of Bitcoins market cap, including companies like Strategy who leverage, is all liquidity used for leveraging and trading derivatives.
It is liquidity supplied by market makers and exchanges, and has no bias towards price going up or down. It’s liquidity that’s fluid, moves in and out, and while you may think that bitcoin would “lose” all the value if it drops to 8,000 momentarily - you must think of it another way.
Bitcoin is a balloon of dollars. The dollars doesn’t affect the function of what Bitcoin does. People from all over use their money to inflate that balloon, and a liquidation event such as a stop loss, then deflates that balloon and transfers the wealth into very few pockets.
The balloon is then quickly re-inflated by the liquidity that’s first deflated, and becomes inflated again by the long orders placed and the shorts stopped out or liquidated.
It’s highly likely the “floor price” of bitcoin is $8,000 - the amount of bitcoin held in stable sources divided by the dispersed amount of bitcoin on the market.
The rest is leveraging liquidity, that is simply a function of inflating and deflating, moving in and out and accommodating orders of both directions - or in other words, the “ gambling industry” within Bitcoin.
Now, TECHNICALLY SPEAKING
We have 2 key trendlines to show.
The first is an ascending channel, that starts at the 8,000 zone. Price consolidated around it all throughout the chart.
Duplicating this trendline we can find a channel, and I show that as the lower red ascending line. This is the main support and resistance we have to understand.
The second trendline is shown in grey. This is again a bearish trend that Bitcoin has been consolidating around since its bottom.
This trendline breakdown takes Bitcoin to 35,000.
If price drops from current level to 35,000 - we can measure the downwards movement, place that measurement from 8,000 - and see that we would form a bear pennant type pattern, rise back up to the RETEST OF THE BOTTOM RED CHANNEL LINE, and then fulfill the measurement of the downwards move all the way to 8,000.
Technically speaking, we can use pattern prediction and support resistance levels to serve as confluence for the liquidity levels and the mechanics of this drop.
So there we have the MECHANICS and TECHNICALS
Additionally about the mechanics or the HOW… the more times Bitcoin doesn’t drop down, moves up - the more of those sell orders are accumulated.
The more TIME Bitcoin spends doing this, and the more AMOUNT of times Bitcoin wicks up like this - this means the FASTER and MORE POWERFUL the drop will be as a consequence.
This is very simply because of the amount of sell orders accumulated in the chart. The more sell orders there are, and the greater the quantity of Bitcoin ordered to be sold, the faster price will drop down.
So in theory, these drops will be the fastest movements we’ve ever seen in bitcoins history.
It’s quite literally a chart filled with rocket fuel and propellant, and all it takes is a fuse to be lit.
Thank you
