The current worst case scenario involves a 28% wick below the 200-week moving average, one theory suggests.
Bitcoin (BTC) could be in for a return to levels not seen since before its 2020 bull market if history repeats itself.
That was according to new analysis released on May 24, which studied Bitcoin’s interaction with its 200-week moving average (WMA).
Bitcoin floor target could be between $15,500 and $19,000
In a Twitter thread, popular trader and analyst Rekt Capital explained how BTC/USD could behave should it fall to retest the 200WMA.
A lifeline throughout Bitcoin’s history, the 200WMA is a constantly rising line of last support that has never been definitively broken.
In times past, Rekt Capital notes, Bitcoin has been “wicked” below the 200WMA — briefly capitulating before rising back above, allowing it to remain as support and not instead flip to resistance.
Those wicks, however, have involved up to 28% of the spot price, meaning that should a similar wick occur now, Bitcoin would end up at $15,500.
“BTC tends to wick -14% to -28% below the 200-MA. And since the $BTC 200-MA now represents the price point of ~$22000… A -14% downside wick below the 200-MA would result in a ~$19000 Bitcoin,” Rekt Capital wrote.
“And if BTC were to repeat the March 2020 downside wicking depth below the 200-MA $BTC would revisit the ~$15500 price point.”
“Pay attention” below $23,000
As Cointelegraph reported, much has been made of Bitcoin price action on May 24 compared to March 2020 at the height of the COVID-19 cross-market crash.
Rekt Capital additionally examined historical drawdowns from all-time highs and Bitcoin’s “death crosses” this month, producing a BTC price target of $22,700 — almost exactly at the current 200WM.
“BTC is slowly approaching the 200-MA Historically, the 200-MA tends to offer fantastic opportunities with outsized ROI for long-term $BTC investors (green circles),” he added alongside a chart showing interactions.
“Should BTC indeed reach the 200-MA support… It would be wise to pay attention.”
Fellow analyst PlanB, the creator of the stock-to-flow BTC price models, has also long championed the role of the 200WMA as support.