• Bitcoin price forecasts drop to $20,000 due to a fractal formation. 
  • Investors can obtain a confirmation of this crash if BTC breaches the $30,000 psychological level on a weekly time chart.
  • Invalidation of the bearish outlook could occur if BTC produces a higher high above $52,000.

Bitcoin price is back to trading at its favorite psychological level and a level that it has traded at for the last month. From a macro perspective, intraday volatility does not matter, since the chances of a massive sell-off that pushes BTC to 2017 levels are high.

How will BTC react to its first recession?

While technicals only paint a part of the picture of why such a crash is inevitable, looking at the current state of the financial markets provides the other half. In a recent report, Ecoinometrics pointed out that the interest rate in the US has reached a 40-year high and that the Federal Reserve is likely to respond by cutting interest rates. 

Interestingly, the last few times this happened, massive recessions followed. Some examples include the DOTCOM bubble between 1999 and 2000, the Global Financial Crisis of 2008 and most recently the COVID crash in 2020.

In all of these cases, the price of risk-on assets like the stock market has suffered brutal sell-offs. Only after the recession ended did these risky assets start recovering. Gold, on the other hand, which is considered a store of value saw a relatively minor sell-off and even quicker recovery.

Lately, Bitcoin has been highly correlated with the stock market and shows no signs of decoupling anytime soon. This intense correlation seems to have started after the COVID crash and persists even today. If this connection continues, there is a high chance BTC will also undergo the same fate as the risky assets or the stock market suffered during the previous recessions.

While inevitable, this outlook indicates that during a time of crisis, the Bitcoin price is likely to undergo a massive sell-off.

Bitcoin price prepares for brutal sell-off

Bitcoin price is showing a bear flag setup within an already ongoing bear flag on the daily chart. As discussed in the previous article, the larger technical formation triggered a bearish breakout on May 6 and has been crashing since. 

In total, this move has led to a 36% loss in a week. However, looking at the big picture shows that the plummet from Bitcoin’s all-time high of $69,000 to $32,837 between November 10, 2021, and January 24, 2022, created the pattern’s flagpole. 

The consolidation that followed after this sell-off is the flag and is present in the form of higher lows and higher highs between January 14 and May 22. This ascending parallel channel-like structure is known as a flag.

Flags are continuation patterns, and for this one the forecast is for price to fall to a target of roughly $20,000. This is obtained by adding the flagpole’s height to the breakout point at $38,305, which as mentioned above, was breached on May 6.

Interestingly, the downtrend from the larger bear flag has produced a smaller one during the consolidation. This technical setup, however, forecasts a 30% drop to $20,000, revealing a confluence and adding credence to the bigger pattern. 

BTC/USDT 1-day chart

BTC/USDT 1-day chart

While things are looking awfully bearish for Bitcoin price, a daily or weekly candlestick close above $52,000 will invalidate the bearish thesis from a macro perspective by producing a higher high. In this situation, Bitcoin price could extend higher and retest the $60,000 psychological level.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content

Recommended Content

Editors’ Picks

Shiba Inu price edges close to a 60% breakout as bears watch in disbelief

Shiba Inu price edges close to a 60% breakout as bears watch in disbelief

Shiba Inu price has managed to stay above the POC at $0.0000118, indicating support from bulls. A continuation of this momentum could trigger a 60% rally to $0.0000200. A daily candlestick close below the $0.0000106 support level will invalidate the bullish thesis for SHIB.

More Shiba Inu news

XRP price attempts a 15% rally on Ripple’s interest in buying Celsius' assets

XRP price attempts a 15% rally on Ripple’s interest in buying Celsius' assets

XRP price shows a willingness to move above a significant resistance level, which it has attempted to do so for the past three months and failed each time. While this attempt is like any other and could fail, especially if the momentum is lacking. 

More Ripple news

Avalanche price makes a turn for the better

Avalanche price makes a turn for the better

Avalanche price shows classic ramping pattern accompanied with price ascension. AVAX price has breached the oversold level on the Relative Strength Index. If the technicals are correct, a breach of the $50 barrier could happen rapidly.

More Avalanche news

Binance Coin Price Prediction: Whales take naps at the shore

Binance Coin Price Prediction: Whales take naps at the shore

Binance coin shows reasons to believe in a market bottom. Traders should keep the smart contract giant on their watchlists throughout the summer. Binance coin price is beginning to show evidence of strength.

More Bitcoin news

Bitcoin: If bulls lose control here, BTC could revisit $21,000

Bitcoin: If bulls lose control here, BTC could revisit $21,000

Bitcoin price shows an interesting setup that could reveal its next move. On closer inspection,  its technicals support a bearish outlook for the leading crypto.  

Read full analysis