The One Good Thing About Crypto Crashing

by | Jun 14, 2022 | Crypto

Happy Tuesday, traders. It’s Matt here.

Today, I’m gonna show you the silver lining in the current crypto crash, and help you plan for what’s next. 

And yes, even in some of the scariest trading conditions we’ve seen in a while, an experienced trader can find something to look forward to. 

It comes from studying the past and understanding one of Tim Bohen’s favorite sayings, “history doesn’t repeat but it rhymes.” 

It’s quite possible that once the dust settles on crypto — once it finds a stable bottom — that eye-popping opportunities could show up again. 

Let’s take a look at what’s happening and what levels to keep an eye on for a potential bounce…

What’s Happening to Crypto Right Now?

The stock market isn’t the only risky asset seeing a drawdown. Traders are pulling the plug on their cryptocurrency investments as well. 

U.S. inflation recently hit a 40-year high and traders are bracing for drastic interest rate hikes. In theory, the latter shouldn’t affect a decentralized financial asset. But with inflation at such high rates, traders just want to make sure their stash is safe.

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It reveals exactly how to tell which cryptos to buy.

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Bitcoin (BTC) dropped around 17% this past weekend and briefly fell below $23,000. Also, $200 billion was erased from the crypto market as a whole. 

Could this be good news in disguise? 

How Has Crypto Behaved in the Past?

BTC has seen steep declines in the past. Sometimes in the range of 80%. And Ethereum (ETH) has seen intense drawdowns as well. Let’s take a look at some of the biggest crypto losses

2013-2015: BTC: $1,127 –> $200 (-82%) 

2017-2018: BTC: $19,423 –> $3,217 (-83%) ETH: $1,448 –> $85 (-94%) 

As of 06/13/2022: BTC: $69,000 –> $23,500 (-66%) ETH: $4,866 –> $1,245 (-74%)

We are getting close to the percentage drops these digital assets have seen in the past. How much longer it could take us to reach a full bottom is up for debate … but I do think it’s coming. 

What are the Key Levels to Watch? 

So if BTC and ETH have more room to fall, when will the drops stop? That’s an excellent question. While no trader has a crystal ball, we do have indicators we can turn to. But first, let’s take a look at percent drops…

If BTC wanted to take an 80% drop from its most recent (late 2021) all-time high of $69,000 (rounding up from its actual high of $68,990.90) before recovering, that would make $13,800 the low point to dip buy at. But what story do key levels tell? 

If BTC falls below $20,000, the support level with a few previous touch points is around $19,000. If that fails, around $16,000. If that also fails, then we’ll get to that $12,000-$13,000 range where there’s lots of previous activity. It would be very surprising not to see buyers come in at that point. 

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If ETH were to take a 90% drop from its all-time high of $4,866 (rounded up from $4,865.57), the coin would have to hit $486.60 before seeing a bounce. 

It recently broke through previous support levels in the mid-$1,200 range. The next leg down could take it to the $700-$800 range. There’s some support in the $500 range, but a lot more support in the $300-$400 range and even in the $200 range. I’ll be watching and updating!

Conclusion

Crypto is a volatile asset. It’s not for the faint of heart. But that same extreme volatility can actually lead to unique opportunities. 

Now is the time to learn exactly how to capitalize on those opportunities. The truth is it’s not as easy as it looks. There are nuances that you can only learn from experience or from a mentor who’s been there. 

We know the markets are scary for a lot of newer traders right now. You probably weren’t expecting things to change like this. You may have even lost more than you planned to. I created the Crypto Trader Blueprint for traders like you who need an edge in this market, and at a price you’d be crazy to pass up. I hope to see you in the Crypto War Room!

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