Bitcoin (BTC) Super Crash: Is Armageddon Already Over?

U.S. President Donald Trump issued a 100% extra trade tariff on China on Friday in retaliation for China saying it would heighten controls on rare earth exports. The move sparked the sharpest fall in the last ten years for Bitcoin as $BTC fell more than $15,000 in just a few hours. That said, has the situation now been resolved, and is the crash already over?

Carnage and mayhem already changing to optimism

Last Friday, which was particularly deserving of being called “black Friday”, at least in crypto circles, more than $19 billion was liquidated in the space of just a few hours. This wasn’t just the worst wipeout in crypto history, it was the worst by a magnitude of about ten times any previous liquidation events.

Even traders who had already watched the first spectacular fall and who had then entered positions in anticipation of a bounce, were then wiped out in their turn as the price just kept on falling.

After such mayhem and carnage, here we are on Monday, and the Bitcoin price is in full recovery mode. After falling to just below $105,000, the $BTC price is now trading at around $115,400 - a $10,000 revival, with potentially a full recovery taking place by the end of this week.

President Trump has walked back on his threats by posting on his Truth Social account on Sunday that “it will all be fine!”. The U.S. stock market appears to believe this assurance as the S&P 500 and Nasdaq futures markets are now climbing. 

Bitcoin tanks but recovery now in full swing

Source: TradingView

The short-term time frame for the $BTC price certainly tells a story. It can be seen that the dip started at $122,600, while up until then it had appeared that it was only a matter of time before $BTC made a new all-time high. However, President Trump had other ideas, and a tirade released on his Truth Social account accused China of holding the world “captive” by monopolising its rare earths.

The U.S. stock market started to fall heavily, although given that Trump’s tirade was released late on Friday, the markets were perhaps fortunate to have been saved from further capitulation by the weekly close of trading.

If the stock market falls heavily, the crypto market is going to absolutely tank, and this is exactly what occurred on Friday and going into Saturday. However, the long red candle down to nearly $105,000 was bought up fairly quickly, as evidenced by the long wick that was left behind.

Now here we are on Monday with a full-blown recovery in mid-flow. The $113,000 horizontal level was rapidly regained, and now the bulls are fighting to sustain the price above the $115,000 resistance. With the U.S. stock market opening later, probably in buoyant mood, after conciliatory noises from both Trump and Chinese sources, the $BTC price could continue to regain lost ground.

Upside price momentum incoming

Source: TradingView

The daily time frame shows how the ongoing recovery is now at the point where practically all the damage has already been undone by the $BTC price. The spectacular fall even tagged the 200-day SMA (red line), which is generally recognised as the bull market support, and has continued up to recently regain the 50-day SMA (blue line). 

At the bottom of the chart, the Stochastic RSI indicators on this time frame were the last to get down into oversold territory and reset, and the huge price dip certainly speeded up this process. With the blue fast line now posturing to cross up above the red slow line, this could be a signal that upside price momentum could shortly be on the way.

$BTC price in ascending wedge

Source: TradingView

A very simple chart view of the weekly illustrates that an ascending trendline held the price, and it appears that this could form the bottom of an ascending wedge. As this trendline climbs at a faster pace than the 8-year ascending trendline above, it will force the price into a narrowing convergence of the two lines and what could be a big price explosion to either side.

At the bottom of the chart, it can be seen that the big dip forced the blue indicator line below the red one. This will potentially reverse back to the upside if the $BTC price continues to increase into the rest of this week.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.