Bitcoin Sell Signals Emerge as Bears Aim for BTC Prices Under $70K

Bitcoin (BTC) is showing early indicators of a significant correction, with the recent recovery stalling at $93,000. New analysis indicates that Bitcoin’s “market structure” increasingly resembles that of early 2022, which signaled the start of the bear market.

Key insights:

• Bitcoin’s onchain structure resembles early 2022, indicating a potential deep bear market if critical levels are breached.

• Bitcoin’s bear flag implies a target price of $68,100.

Bitcoin onchain data suggests early bear market

Bitcoin has fallen toward and found support near its True Market Mean, currently at $81,500, according to onchain data provider Glassnode.

The True Market Mean, or the Active-Investor Price, reflects the cost base of all active coins, excluding those held by miners.

Related: Strategy’s ‘unicorn’ technical pattern signals a possible 50% rebound in MSTR stock

“This level often marks the threshold between a mild bearish phase and a severe bear market,” Glassnode stated in its most recent Week On-chain report, adding;

“While the price has stabilized above this line, the broader market structure is increasingly reflecting the dynamics of Q1 2022.”

The chart above shows that the BTC/USD pair traded above this level from January 22, 2022, until May 5, 2022. After BTC dipped below this threshold on May 6, the price plummeted an additional 61%, bottoming at $15,500 in November of that year.

The correlation is supported by a Supply Quantiles Cost Basis model, which monitors the entry price of major coin clusters. Since mid-November, Bitcoin’s price has dropped below the 0.75 quantile, currently trading at approximately $96,100, putting over 25% of supply at a loss.

This situation has created a precarious “balance between the risk of top-buyer capitulation and the possibility of seller exhaustion forming a bottom,” according to Glassnode, adding:

“The current structure remains highly vulnerable to macro shocks until the market can reclaim the 0.85 quantile (~$106.2K) as support.”

CryptoQuant’s Bull Score Index provides a more detailed perspective after declining sharply since August and dropping below 40 in October. The metric has remained stable throughout November despite short-term price fluctuations.

The latest reading falls within the 0-20 range, indicating deep bearish conditions, akin to the levels seen in January 2022, as illustrated in the chart below.

As reported by Cointelegraph, Bitcoin’s price behavior is exhibiting other parallels with the bear market of 2022.

Bitcoin’s bear flag targets $69,000

Bitcoin’s most recent recovery attempt was thwarted by significant resistance around $93,000, according to data from Cointelegraph Markets Pro and TradingView.

This level aligns with the yearly open and the upper boundary of a bear flag, as depicted on the two-day chart below.

A break and close beneath the flag’s lower boundary at $91,000 will confirm the bear flag, paving the way for a new downtrend toward the measured target of the pattern at $68,150, or the previous all-time highs of 2021. Such a movement would lead to total losses of 27%.

Momentum indicators, including the relative strength index (RSI), remain sluggish at 40, indicating that market conditions still favor a downside trend.

As noted by Cointelegraph, the bearish pattern will be invalidated if buyers drive the price above $96,000, supported by a positive Coinbase Premium.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.