Bitcoin price has just today set a new high for 2020 and is showing no signs of slowing down. However, as greed reaches extreme levels and ROI is stacking across the board, could the cryptocurrency see a surprise correction?
According to a chart that first debuted around Black Thursday, this latest high will result in a pullback toward former lows, before the final bull market breakout takes place. Will the cryptocurrency market see a strong correction based on this “supercycle” theory chart shared by a reputable Singapore-based crypto fund?
Crypto Market Ready For Bull Run, Or Has Greed Gotten Ahead Of Reality?
Today, Bitcoin price exploded through resistance at $12,000 and is trading well above $12,250 at the time of this writing. The entire crypto market is up well over 80% on the year, with Bitcoin right behind at more than 70%.
BTCUSD YTD ROI | Source: TradingView
Google Trends shows that searches for crypto are picking up rapidly, suggesting that interest is returning to the market in a major way. Most Coinbase coins are up over 57% over the last month alone, and the crypto fear and greed index has reached levels of extreme greed.
Related Reading | Be Fearful: Crypto Market Greed Reaches Second Highest Point In History
Markets tend to alternate between greed and fear, both reaching extremes before turning around. Some of the world’s best investors and traders advocate taking a contrarian stance for this very reason. Markets tend to reverse in the opposite direction after achieving such a peak in sentiment.
The last time the fear and greed index reached such a high, was back when Bitcoin was trading above current levels, where a rejection at $14,000 took place.
Bitcoin “Supercycle” Theory Calls For One Last Dip Before Uptrend Begins
This top sent Bitcoin tumbling back down to the Black Thursday low at $4,000. Prior to that fateful day, the market wasn’t that fearful since the bear market bottom at $3,000.
The bouncing back and forth between extreme fear and greed, also closely matches a price chart first shared following the Black Thursday collapse. Singapore-based QCP Capital shared the chart they received from a “professional chartist,” calling for what the firm says is a Bitcoin “supercycle.”
This “supercycle” is a five-wave ABCDE corrective triangle, where price action tightens and tightens until there’s ultimately a breakout an expansion.
The chart does claim that $10,000 would have acted as the second high, or D-wave, before falling to the final E-wave, then taking off into an uptrend. This, of course, didn’t happen, and Bitcoin is trading at over $12,000.
Related Reading | Economist: Early Days of Bitcoin Uptrend Are Here, Breakout Has A Long Way To Go
The cryptocurrency, however, still has yet to make a higher high beyond the top last year at $14,000. This still falls into the parameters for an ABCDE corrective wave, keeping the “supercycle” theory alive just a little while longer.
If the supercycle idea follows through, Bitcoin has another drop ahead to roughly $7,000 before the bull market finally begins.