Cryptocurrency-related stocks have plunged hard in the past few weeks as the momentum in the industry accelerated. CleanSpark (CLSK) stock collapsed from $24.75 on March 27th to a low of $15.65.
Other Bitcoin mining stocks like Hut 8 Mining (HUT), Marathon Digital (MARA), and Riot Platforms (RIOT) have all crashed by over 20%, meaning that they have moved into a deep bear market.
MicroStrategy (MSTR) stock has plunged by over 48% from its highest level this year. That sell-off accelerated after the company announced weak financial results as its loss increased to over $53 million.
Coinbase stock has dived by over 25% from its highest level this year ahead of its earnings on Thursday.
Bitcoin price formed a C&H pattern
This price action is mostly because of the performance of Bitcoin and other cryptocurrencies. Bitcoin has now slipped by over 22% from its highest point this year. It has fallen in the past six straight weeks, its longest losing streak since 2022.
It is clear why Bitcoin price has crashed in the past few weeks. It simply lacks a clear catalyst since Bitcoin has already gone through a halving event while the Securities and Exchange Commission (SEC) has approved ETFs by companies like Blackrock and Fidelity.
In an article on Wednesday, I warned that the coin has formed a bearish engulfing pattern on the monthly chart. That is a sign that the coin is about to do a steep reversal .
However, a closer look at the weekly chart shows that Bitcoin has formed a cup and handle pattern, which is a popular sign of continuation. The ongoing retreat is part of the handle section.
At the same time, Bitcoin has constantly remained above the 50-week and 100-week Exponential Moving Averages (EMA). Therefore, there is a likelihood that the coin will bounce back later this month. The ongoing retreat could see it drop to the key support level at $48,300, its highest swing in March 2022.
Therefore, if this prediction happens, there is a likelihood that most crypto-focused stocks like CleanSpark, Hut 8 Mining, MicroStrategy, and Coinbase will bounce back.
Gold formed a cup and handle pattern
We have seen this performance happen before. For example, in the chart above, we see that the price of gold formed a cup and handle pattern on the monthly chart. The upper side of this pattern was at $1,920. It also formed a handle section between August 2020 and 2023 before the recent rebound.
