As Bitcoin (BTC) strives to maintain the $90,000 threshold, some analysts believe that indications of a bear market for the leading cryptocurrency are becoming more pronounced, implying that a decline to new lows may be imminent.
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Bitcoin Bear Flag Raises Concerns
On Friday, Bitcoin reversed its gains from Thursday, falling 3.2% during the day to revisit the $89,500-$90,500 support area once more. For the past four weeks, the cryptocurrency has been fluctuating within a range of $84,500-$94,500, hitting a seven-month low of $80,600 during the correction in late November.
This week, Bitcoin’s price has experienced increased volatility, driven by expectations surrounding a potential interest rate cut from the Federal Reserve and favorable regulatory news in the US. Nevertheless, BTC has struggled to decisively break above and sustain its position beyond the upper limit of its recent trading range, eventually retreating to the mid-range levels.
Analyst Ted Pillows identified a troubling pattern in Bitcoin’s chart, cautioning that if the price fails to maintain critical support levels, a decrease to new multi-month lows could occur.
According to the analysis, BTC has been forming a bear flag for almost a month, a situation “too hard to overlook” as the price continues to be rejected by the upper boundary of the formation. The analyst has stated that this pattern aligns with a trend observed over the past two months.
He noted that bearish flags have been emerging on BTC’s chart since the market pullback on October 10, each resolving with declines to lower levels. According to Ted, the latest formation indicates “that the overarching trend remains downward.”
He suggested that a close above the $96,000 mark would negate the bearish pattern. Conversely, a drop below the $86,000 support, which forms the lower boundary of the formation, could lead Bitcoin towards the April lows around $76,000.
Is The 2022 Playbook Repeating?
The market observer also pointed out similarities between the previous cycle and the current one, which could potentially bring about a decline below the $70,000 threshold. The chart indicates that after relinquishing the 50-Week EMA signals, Bitcoin consolidated within a bear flag before breaking down to reach the lows of 2022.
Currently, BTC appears to be mirroring this pattern following a loss of the 50-Week EMA and breaking down from its bear flag established in October. “If this scenario unfolds, it would likely result in a surge to $100,000 followed by a drop below $70,000,” the analyst remarked.
Meanwhile, Robert Mercer expressed a similarly cautious outlook in a series of posts on X. He emphasized that the traditional four-year cycle remains unchanged despite a notable rise in institutional involvement:
Bitcoin is breaking critical supports sequentially and entering a bear market. This was also observed at the end of 2021. Presently, BTC is forming an ascending channel with the peak around $100,000 – $104,000, and a clear Right Shoulder of H&S can be seen in this movement. Similar patterns occurred at the beginning of 2022.
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Nonetheless, he concluded that “no such breakdown occurs without a retest,” predicting a brief bounce up to the $98,000-$102,000 range, followed by a decline to the support area of $55,000-$60,000.
At the time of this writing, BTC is trading at $89,990, reflecting a 2.75% decline over the day.
Featured Image from Unsplash.com, Chart from TradingView.com
