What is the worst-case scenario for Bitcoin right now? Analyst explains

In his latest video published on December 21st, crypto analyst Rekt Capital attempted to answer the question: “What is the worst-case scenario for Bitcoin right now?” After hitting a new all-time high of $108,374 on December 17, BTC price has fallen by more than -11%.

How low can Bitcoin price fall?

Rekt Capital looked at the Bitcoin price decline from a historical perspective, highlighting the historical importance of weeks 6, 7 and 8 for a “price discovery uptrend.” Citing previous cycles such as 2013, 2016-2017 and 2021, he explained that Bitcoin has a strong tendency to correct in these specific time frames, with some dips reaching up to 34% or even more.

“It is critical to understand these weeks as they tend to be problematic for Bitcoin,” Rekt Capital explained, pointing to past cycles that have seen significant downturns within this period. For example, in week 7 of the 2013 cycle, Bitcoin experienced a dramatic 75% decline over 13 weeks. Likewise, in 2016-2017, there was a 34% decrease in week 8, highlighting the recurring vulnerability in these specific weeks.

Since the current cycle, Bitcoin has undergone a retracement of more than 10%, taking its price to a historically critical support zone at $96,537 on the weekly chart. Rekt Capital emphasized the importance of this support level, noting: “This area of historical support enabled the rise to $108,000.” He warned that maintaining this support could trigger a stronger correction to $89,830.

Examining price movements over the past few days, Rekt Capital pointed to the formation of a bearish engulfing candle on the weekly timeframe – a technical indicator often associated with possible reversals. “We are losing resistance that has turned into support,” he noted. This loss indicates a possible transition into a correction phase as the price struggles to maintain its uptrend.

Rekt Capital also noted the importance of maintaining the 5-week technical line in its analysis. “If we lose this 5-week technical uptrend and the orange trendline, signs would increase that we may be entering a correction phase,” he warned.

Additionally, he discussed the CME gap between the $78,000 and $80,000 price levels, a critical area that has not yet been filled. “Dealing with 26%, 27%, 28% dips could close the entire CME gap,” Rekt Capital noted.

Historically, there has been a tendency for CME gaps to be closed, while there are a few that have never been closed. Despite all the warning signs, Rekt Capital remains optimistic in the long term: “These setbacks enable future uptrends in the parabolic phase of the cycle,” he explained. Using previous cycles, he illustrated how corrections in the past have provided the necessary “breather” for the market.

For example, in the 2021 cycle, Bitcoin experienced a 16% decline in week 6 and an 8% decline in week 8, but the overall trend continued upward. Likewise, the current 10 percent retracement, while significant, could serve as a preparation phase for the next phase of price discovery.

At press time, BTC was trading at $95,000.