🔥 Stock Market Copying 2008: Will Crypto Crash Again?
Over the last couple of weeks we've seen a lot of bullishness return to the markets. When I look at my own analyses they've been predominantly bullish. While I believe that there are reasons to be bullish in the short-term, the longer-term remains cloudy for both the stock and crypto markets.
Now to the analysis.
In 2008 we saw:
- A downsloping trend line with 3 touches. The last touch was the start of the market crash.
- A bear market rally of ~12% once oil topped.
- A 48% crash in three months after the third touch of the trend line.
In 2022 we see:
- A downsloping trend line with 2 touches. Currently extremely close to the third touch.
- A bear market rally of ~21% once oil topped.
"History Never Repeats Itself, But It Often Rhymes"
It's difficult to predict the future by only looking at historical events, but the similarities between 2008 and 2022 are very real and can signal the potential for a further decline. With September and October historically being the worst months in mid-term election years, I think it's very possible that we're going to see more bearish price action.
As for crypto, the story will likely be the same since BTC follows the stockmarket.
As seen on the picture below, BTC is still trading inside a bear flag. Bear flags tend to break bearish. Whether we're going to make new lows below 17.5k remains to be seen. Nevertheless, we should prepare for the worst outcome in case we see another >40% decline in the stock markets. If the stock markets will crash this much I wouldn't even be surprised if we will trade below 10k.
Like mentioned before, it's hard to predict what will happen. Being aware of different potential scenarios can never hurt.
Now to the analysis.
In 2008 we saw:
- A downsloping trend line with 3 touches. The last touch was the start of the market crash.
- A bear market rally of ~12% once oil topped.
- A 48% crash in three months after the third touch of the trend line.
In 2022 we see:
- A downsloping trend line with 2 touches. Currently extremely close to the third touch.
- A bear market rally of ~21% once oil topped.
"History Never Repeats Itself, But It Often Rhymes"
It's difficult to predict the future by only looking at historical events, but the similarities between 2008 and 2022 are very real and can signal the potential for a further decline. With September and October historically being the worst months in mid-term election years, I think it's very possible that we're going to see more bearish price action.
As for crypto, the story will likely be the same since BTC follows the stockmarket.
As seen on the picture below, BTC is still trading inside a bear flag. Bear flags tend to break bearish. Whether we're going to make new lows below 17.5k remains to be seen. Nevertheless, we should prepare for the worst outcome in case we see another >40% decline in the stock markets. If the stock markets will crash this much I wouldn't even be surprised if we will trade below 10k.
Like mentioned before, it's hard to predict what will happen. Being aware of different potential scenarios can never hurt.
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