The prelude was a similar +60% drop from ATH, with a period of stagnating prices, or “crabbing”.
Until at point 1, came the breaking point where the market went into full panic mode and everyone who had any doubt, exited the market. Going at maximum selling pressure.
In both cases the drop was at over 40%.
Until at point 4 came the saturation point. The stampeded of sellers had all sold, and were all out of the market.
The price went too far below the bulk of the bull run’s entry points and stop losses, and extended as far as supply and demanded forces allowed.
At point 5 the price bounced back but then was followed by a period of slow decline, and ultimately in both cases, tried to re-test the lows. Which is what we see now with the drop below $19K.
There is the issue of time being different. With the 2018 taking about 3 months, versus 1 month. But they’re still both under 3 months. The more important part is they are both similar in proportions in terms of drop.
Why are things suddenly similar?
Probably because we are dealing with very similar market dynamics, and supply and demand interactions.
In both cases, we came out of a major stress in terms of drop and fear, crashing from an ATH, and going into a bear market.
That level of fear and panic creates a more emotional market.
When markets get emotional, they follow more of the classic market emotional psychology, rather than follow logic, fundamentals, or macro economics.
The market will always follow supply and demand, and the path of least resistance.
Once you run out of sellers, because they all panicked out at the same time, are too far in the red, or have already hit all their stop losses, you’ll start seeing selling pressure max out, and then eventually reverting to buying pressure, as demand comes back to pick up the scraps and overextended low prices.
Which is what we started seeing later on in February and March 2018.