How low will Bitcoin Drop?

Bitcoin has taken quite a tumble from the high on Dec 18th to today, a drop of over $12,000, a staggering 63% loss. So where does this leave us? Is this where price bottoms out and rises again or is there still more room to the downside?
Unfortunately, no one can give a certain answer to that, but I will try to give a price action analysis of the drop so far.

Looking at this 4Hour chart of Bitcoin (BTCUSD) it is easy to see that drop has been done in three legs. From the high of $19,475 to $10,642, then from $16,879 to $9,191, and finally from $11,916 to a temporary low today of $7,207. In between the legs the market has been consolidating.

Temporal point of view

The first leg down lasted a week and the second leg lasted about one and a half week. So these are relatively short down trends, and might indicate that the current leg also might be over soon. However, "might" is the operative word here:)

Momentum

Both of the first legs have dropped hard about half of the leg before consolidating and then dropping the rest sharply. A similar pattern can be seen in the current leg. This does not have to mean anything for future price action, but it is still interesting for the analysis.

Further the first leg dropped down about $8,900 and the second one $7,700. So far the current leg is down $4,750 so this speaks agains the matket bottoming out here. However, the third leg might be shorter than the second.

Fundamentals

As most traders know the real drive of crypto currencies is media exposure and news. Last week's news from India and South Korea, Facebook stopping crypto related adds and speculations about regulation have been the reason for the last drop.

So the crypto markets could need a more positive media sentiment in order to turn around. Or perhaps some major global news that will influence the tech markets.

Conclusion

From a technical point of view Bitcoin might bottom out this week. But the more important fundamental side still points down for the cryptos. We probably need some good news to stop the drop.