As Bitcoin (BTC) tries to hold on to the $90,000 barrier, some analysts are asserting that bear market signals for the flagship cryptocurrency are becoming clearer, suggesting a break to new lows could be on the horizon.
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Bitcoin bear flag raises concerns
On Friday, Bitcoin pared back Thursday’s gains, falling 3.2% intraday and retesting the $89,500 to $90,500 support zone. The cryptocurrency has been trading in a range of $84,500 to $94,500 for the past four weeks, and at one point fell to a seven-month low of $80,600 during a correction in late November.
This week, the prices of leading cryptocurrencies have seen more volatility due to expectations for a rate cut from the Federal Reserve and positive regulatory developments in the United States. However, BTC was unable to successfully break out and sustain the upper bound of its local range after multiple retests, eventually falling into the mid-zone of that range.
Analyst Ted Pillows highlighted a worrying pattern on Bitcoin’s charts, warning that the cryptocurrency risks falling to multi-month lows if the price fails to maintain key support levels.
According to the same post, BTC has been forming a bear flag for nearly a month, which is “too hard to ignore” as price continues to be rejected from the upper bound of the formation. Analysts asserted that this pattern follows trends that have been developing over the past two months.
As he pointed out, since the October 10th market pullback, bearish flags have been continuously forming on the BTC chart, with each pattern being resolved with a breakdown to a lower level. Mr Ted said the new regime showed “the overall trend remains downward”.
He suggested that the bearish pattern will be invalidated if the price closes above the $96,000 level. Conversely, a break below the support at the lower end of the formation at $86,000 could push Bitcoin back to April lows, near $76,000.
Will the 2022 strategy be repeated?
Market observers also pointed out that the previous cycle and the current cycle are similar and it could fall below the $70,000 level. This chart shows that Bitcoin lost its 50-week EMA indicator, consolidated within the bear flag, and then broke and fell to its 2022 lows.
Currently, BTC has lost its 50-week EMA and is performing similarly after breaking from the bear flag in October. The analyst added: “If this happens, it will rise to $100,000 and then fall below $70,000.”
Meanwhile, Robert Mercer shared similar views in a series of X posts. Analysts asserted that despite the significant increase in institutional adoption, the classic four-year cycle remains unchanged.
Bitcoin is breaking through key supports one by one and entering a bear market. The same thing happened at the end of 2021. At the moment, BTC is forming an ascending channel that peaks around $100,000 to $104,000, and we see a clear right shoulder for H&S in this move. A similar thing happened at the beginning of 2022.
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Nevertheless, he concluded that “without retesting, such a failure will not occur,” and predicted a bailout rebound from $98,000 to $102,000, followed by a sharp fall to the $55,000 to $60,000 support level.
At the time of writing, BTC is trading at $89,990, down 2.75% on a daily basis.
Featured image from Unsplash.com, chart from TradingView.com
