On January 22 this year, 71-year old veteran trader Peter Brandt called an 80 percent retrace to sub $4,000 for Bitcoin, based on a general rule of technical analysis.
In an interview with Yahoo! Finance, he spoke of how he had seen other markets that experienced parabolic advances affected in similar ways and it always ends the same – “Prices always fall 80% to 90%,” he said.
Despite the recent rebound that saw Bitcoin rally from $3,200 to almost break back above $4,000, he thinks a test of 2013’s high of $1,200 is still a very real possibility. He cited the tendency for bear markets to retest previous highs before a full reversal begins.
“Crypto won’t have any friends at that point,” he said.
Brandt makes it clear that he is simply pointing out typical movements in financial markets and is no way a critic of Bitcoin or cryptocurrency, stating that a return to the December 2017 high of $19,000 for BTC is still a possibility. Speaking on the current rally, he believes it’s most likely a “dead cat bounce” and will reach $4,600 at best before retracing to sub-$3,000 in the first quarter of 2019.
BTC is currently trading at $3,700, up 10 percent in the past week. Analysis by FXStreet sees the Relative Strength Index (RSI) for BTC/USD reversing to the upside, indicating a possible recovery to $3,800 or above. However, if bears manage to push it below $3,500 then it may only find support around $3,380.