Can El Salvador Save Bitcoin Price From Brutal Crash To $12,500?
- Bitcoin price suggests a 23% crash as bearish continuation pattern develops.
- El Salvador’s decision to accumulate BTC may circumvent this pessimistic fate.
- Invalidating the bearish outlook will only happen if the major crypto turns the $19,011 barrier into support.
The Bitcoin price has been in a bind since the start of 2022, be it the Terra-Luna debacle, the Three Arrows Capital implosion or the recent collapse of the FTX exchange. Bullish news has been rare for the major crypto, or so we thought.
Nayib Bukele, the president of El Salvador, announced earlier Thursday that the Central American country will initiate a BTC purchase program starting on November 18.
El Salvador helped Bitcoin reach an all-time high last year
El Salvador’s most relevant appearance in crypto headlines was when it accepted Bitcoin as legal tender in September 2021. Due to market conditions, the Bitcoin price fell 23% over the following three weeks or so, but surged a whopping 70% soon after, hitting a new all-time high of $68,789 on November 10, 2021.
If history were to repeat itself this time around, a bullish outlook for the cryptocurrency ecosystem and Bitcoin could be around the corner. However, the technique does not appear to be as forgiving as one might expect, predicting a brutal selloff. As a result, a minor bounce followed by a dive could be in the works for BTC.
Bitcoin price and its bearish outlook
Bitcoin price is showing what everyone has been dreading, a bearish continuation pattern. This setup is known as a bearish pennant and features a massive crash followed by a consolidation in the form of a symmetrical triangle.
The target for this technical formation is achieved by measuring the 23% Bitcoin price crash noted between November 8th and 10th and adding it to the breakout point of $16,352. Although BTC has not broken the pennant to the downside, the target is based on this measuring technique $12,490.
This target is definitely not a surprise considering our previous publications that estimate a macro bottom between $11,989 and $13,575. However, what could catch traders off guard would be the buy-stop liquidity above $17,200.
Traders should prepare for a quick liquidity grab above the aforementioned level before any major moves, the downside begins.
BTC/USDT 1-Day Chart
Institutions announce their FTX losses one by one
Adding credence to the bearish outlook is Singapore’s government-owned holding company Temasek’s announcement on November 16 to write down its $275 million investment in FTX. Considering how big the now defunct exchange was, more institutions are likely to come out of the woodwork and could trigger another selloff.
Genesis’ lending division is also in trouble as it stopped customer redemptions and new loans on 16 November. This has caused widespread panic among investors, triggering a 3.5% drop in the Bitcoin price.
As a safe bet, investors and traders should consider withdrawing funds from centralized exchanges and look into self-storage to prevent the spread of the ongoing contagion.
Regardless, the bearish outlook outlined above will only be invalidated if the Bitcoin price produces a decisive flip off the 2022 peak trading volume level of $19,011. In that case, a shift in the narrative could attract enough buyers on the sidelines to catalyze a bullish move to mark the $20,000 psychological level.
