The Great Crypto Slump By Mid-2023: Predictions for BTC, ETH, and DOGE

Hey traders! Welcome to the first edition of our technical analysis article where we'll be taking a deep dive into the nitty gritty of chart patterns, moving averages, Fibonacci ratios, etc., etc., to try to determine if certain cryptocurrencies are headed for a fall. In the first edition, we’ll be covering Bitcoin, Ether, and DogeCoin.

But first, let's get one thing straight: technical analysis is not an exact science, and even the most seasoned traders can be caught off guard by market movements. So before you go betting the farm on our analysis, remember to use your discretion and do your own research. After all, the only thing that's certain in the world of cryptocurrency is uncertainty (and maybe a few memes).

So, without further ado, let's get down to business and see if Bitcoin, ether, and dogecoin are really headed for a bearish run. Will they be crashing to the ground, or will they bounce back with a bullish vengeance? Spoiler alert: the picture ain’t pretty.

Bitcoin (BTC): 🔽 Bearish

As 2022 comes to an end, it’d be appropriate to take a step back and look at the bigger picture. In a nutshell, the following monthly graph depicts a bearish outlook going into the beginning half of 2023.

There is no way of knowing where exactly BTC will find bottom but by measuring the 63% plunge we saw between April through June, we can approximate the next landing for Bitcoin which is between $11,365 - $9,140. The current monthly RSI figure stands at around 40, implying there is still room for BTC to fall before going into the oversold area.

However, based on the lowering volume and sluggish performance of BTC in the past two months, it is likely we won’t see a sudden plunge but rather a gradual decline into the aforementioned landing zone. The estimate is between April - May of 2023, implying we’ll likely see more sluggish action in the beginning of 2023.

The play here is to wait for BTC to rebound from its current price level to the low of October ($18,180) then place a limit short above $18,000 with a stop loss at $23,300 (Close of July) and the first target level at $13,370. Once BTC hits the first target, we’ll lower the SL level to breakeven and move our second target level to $11,365.

The risk/reward ratio for this trade is at 1-to-1.5 which also means the higher the rebound the better the ratio becomes as we’ll be able to short from a higher price. This trade will last for months, so the advantage is not having the need to look at it everyday but the disadvantage is a portion of our fund will be locked in. Also, the tradeoff is a potential 25% loss for a 37% gain, hence money management and a good entry are keys to this particular trade.

For those unwilling to short, the best play here is to apply the dollar-cost averaging strategy by purchasing at the edge of each of the support zones mentioned below. Again, the right way to do this is through proper money management so our funds won’t be locked into one trade.

Potential Short Play:

Risk/Reward Ratio: 1-to-1.5

Entry: $18,100 or Above

SL: $23,300

Target One: $13,730

Target Two: $11,365

Nearest monthly support zone: 16,845 - 16,430

Nearest monthly resistance zone: 17,875 - 18,455

Monthly Key Level: 13,965 (Monthly High of Jun. 2019)

BTC Month Resistance zones

1. 19,015 - 19,860
2. 20,505 - 23,135
3. 26,260 - 28,295

BTC Monthly Support zones

1. 16,845 - 16,225
2. 14,655 - 13,780
3. 13,730 - 11,365

Ether (ETH): 🔽 Bearish

Like its BTC counterpart, the performance of Ether had been sluggish in the past couple of months to say the least. Between July through October, the volumes on ETH had seen a drastic decline. In November, there were more sellers than buyers despite a surge in volume, meaning an attempt to make a “higher-high” formation ended up as a failure which exacerbated its decline before finding support and rebounding from $1,125 (Monthly Close of Jan. 2018).

The two “lower-low” price action formations between August through December imply a high likelihood of Ether continuing its bearish outlook going into the beginning of 2023. Although it must be noted that the December candle appears to be much more resistant to further declines, as such it is likely December will end slightly above $1,125, which isn’t enough to serve as an indication of a reversal.

By measuring the 75% decline between April through June, we can project a likely landing zone for Ether which is around $735 (Monthly Close of Dec. 2017). The current monthly RSI stands at 43, indicating there is more room for ETH to fall until we see an oversold signal. However, considering the speed of the decline in the past five months following a spike in July, the projection must be stretched out to compensate for the lack of volatility, which translates to a relatively longer period (May. 2023) for Ether to arrive at its landing zone of $735.

The play here is wait for Ether to rebound to its monthly 20-EMA or around $1,313. When it does, we’ll find an entry above $1,300 or the opening price of December. Then we’ll place a stop loss at $1,665 (Height of October) and mark the first target at $860 (Monthly High of Dec. 2017). Once ETH hits our target level, we’ll proceed to move our SL to breakeven and then mark the second target level at $735.

The risk/reward ratio for this trade is 1-to-1.7, meaning the higher the entry the better the payout and the less risk we have to deal with. The tradeoff is a potential 25% loss for a 45% gain. Also, since this will be played out on the monthly timeframe, a portion of our fund will be locked-in for the foreseeable future, which means money management will be a crucial factor in freeing ourselves for other opportunities during this period.

For those unwilling to short, the best play here is to apply the dollar-cost average strategy by purchasing at the edge of each of the support zones mentioned below. Again, the right way to do this is through proper money management so our funds won’t be locked into one trade.

Potential Short Play:

Risk/Reward Ratio: 1-to-1.7

Entry: $1,315 or Above

SL: $1,665

Target One: $860

Target Two: $735

Nearest monthly support zone: 1,150 - 1,125

Nearest monthly resistance zone: 1,315 - 1,430

Monthly Key Level: 1,125 (Monthly Close of Jan. 2018)

ETH Monthly Outlook: Chart Link

ETH Month Resistance zones

1. 1,315 - 1,430
2. 1,800 - 1,945
3. 2,000 - 2,280

ETH Monthly Support zones

1. 1,150 - 1,125
2. 1,000 - 980
3. 860 - 735

↕️ DOGECOIN (DOGE): Mixed Outlook

Because of its fanbase and the potential influence Elon Musk poses, DogeCoin’s outlook is simply much harder to predict. Recently, Must’s buyout of Twitter, and the following rumor of a Twitter coin, has helped catalyze DOGE’s rebound from its 38.2% ($0.06150) monthly Fibonacci Retracement level into its 23.6% ($0.1315) level (measured from Nov. 2020 - Apr. 2021).

However, as apparent on the monthly chart, DOGE’s subsequent decline has already exceeded at least 50% of the rebound from October, which isn’t a good sign on a technical aspect, although it must be noted that as long as DOGE is able to remain above the opening price of August ($0.06810), then the outlook for DOGE remains bullish as the latest decline has yet to invalidate the “higher-high” price action formation.

At the same time, considering a bearish macro outlook going into 2023, it is just as likely DOGE will dip below the 38.2% ($0.06150) monthly Fibonacci Retracement level. Hence, there are two plays to consider.

Before executing the long trade, we must wait for DOGE to dip below the monthly 20-EMA, and the subsequent 38.2% Fibonacci Retracement level, then we must wait for DOGE to rebound from its Mar. 2021 closing price of $0.0538. Note that it is important DOGE does not close below the 38.2% Fibonacci level on the monthly timeframe for this trade to be valid.

If this were to happen, then we’ll wait for DOGE to hit the 38.2% Fibonacci Retracement level again before placing a long entry above $0.06150. Once we’ve entered the trade, we’ll place a stop loss at $0.0480 (Monthly Close of Feb. 2021) and mark the first target at $0.1095. Once we’ve hit the first target, we’ll move our SL to breakeven and set the second target to 0.1586. This risk/reward ratio for this play is 1-to-7.6, meaning the tradeoff is 20% loss for a potential 160% gain.

Now, for the short play to be valid, we must still wait for DOGE to dip further and then to make a rebound from the 38.2% ($0.06150) monthly Fibonacci Retracement level. This is when we place a short entry at $0.0800 with a SL at $0.0805 and mark the first target at 0.0538. Once DOGE hits our first target, we’ll move our SL to breakeven and set our second target to $0.0370. The risk/reward ratio for this play is 1-to-1.5, meaning the tradeoff is a potential 35% loss for a 53% gain.

As mentioned time and again, all of the suggested plays are based on the monthly timeframe, which means it is up to the trader to apply proper money management in order to avoid being trapped into one trade while letting other opportunities slip away.

Potential Long Play:

Risk/Reward Ratio: 1-to-7.6

Entry: $0.06150 or Below

SL: $0.0480

Target One: $0.1095

Target Two: $0.1586

Potential Short Play:

Risk/Reward Ratio: 1-to-1.5

Entry: $0.0800 or Above

SL: $0.0805

Target One: $0.0538

Target Two: $0.0370

Nearest monthly support zone: 0.0615 - 0.0538

Nearest monthly resistance zone: 0.0805 - 0.1095

Monthly Key Level: 0.0800 (Monthly High of Jan. 2021)

DOGE Monthly Outlook: Chart Link

DOGE Monthly Resistance zones

1. 0.0805 - 0.1095
2. 0.1148 - 0.1316
3. 0.1586 - 0.2100

DOGE Monthly Support zones

1. 0.0615 - 0.0538
2. 0.0482 - 0.0370
3. 0.0333 - 0.0276

Now, it's time to wrap up the first edition of our technical analysis deep dive. While we've examined chart patterns and other technical indicators to try to determine if these cryptocurrencies are headed for a bearish run, it's important to remember that technical analysis is not an exact science. (You: Okay mom, I get it! Only I am responsible for my own actions and potential losses.)

And with that, just remember, when it comes to trading crypto, it's always important to prioritize discretion and thoroughly research your trades. Who knows, you might even come up with better trade ideas along the way.

Also, feel free to drop a message in our Reddit community to counter these trade ideas with your own analysis. Or if you’d like us to cover your favorite, do that instead! Just let us know in our community. Merry Christmas and good luck, you’ll need it!