Bitcoin's Bearish Signals are Hard to Overlook: Analyst Warns of Potential Drop to April Lows

As Bitcoin (BTC) struggles to maintain the $90,000 level, analysts are increasingly noting that bearish signals are emerging in the flagship cryptocurrency's market. This could point toward a possible downturn to new lows.

Key Takeaways

Bitcoin is struggling with bearish signals as it attempts to maintain the $90,000 threshold.
The cryptocurrency has seen volatility influenced by Federal Reserve rate cut expectations and regulatory developments.
Analyst Ted Pillows warns of a bear flag pattern that could result in declines to new multi-month lows.
Similarities are being drawn between the current market cycle and past trends, indicating potential drops below critical support levels.

Bitcoin, crypto

Bitcoin's Bear Flag Strategy Raises Alarm

On Friday, Bitcoin saw a significant decline, losing 3.2% from its Thursday gains and retesting the critical support zone of $89,500-$90,500. Over the past four weeks, the cryptocurrency has fluctuated between the $84,500-$94,500 range, having briefly dipped to a seven-month low of $80,600 during the late November correction.

The recent week has seen heightened volatility for Bitcoin, spurred by the anticipation of a Federal Reserve interest rate cut and positive regulatory news from the US. Despite these conditions, BTC has struggled to establish a firm position above the upper range after numerous attempts, ultimately settling in the middle of its trading range.

Analyst Ted Pillows raised concerns about a pattern observed on Bitcoin's chart, suggesting that if the price cannot maintain crucial support levels, a drop to new multi-month lows may be imminent. According to his findings, Bitcoin has been forming a bear flag for nearly a month, a pattern that “is too hard to ignore,” as it consistently gets rejected from the formation's upper boundary. Pillows affirmed this trend has been evident for the last two months. bitcoin BTC's one-month bear flag pattern. Source: Ted Pillows on X

He noted that bearish flags have been appearing on Bitcoin's chart since the market pullback on October 10, with each pattern leading to lower price levels. Pillows emphasized that the current formation indicates that the general trend remains downward. A close above $96,000 would negate the bearish pattern, while a drop below the $86,000 support – where this formation’s lower boundary rests – could lead Bitcoin to test April lows near $76,000.

Are We Seeing a Repeat of the 2022 Playbook?

The analyst also pointed out similarities between the current market cycle and previous ones, suggesting a potential fall below $70,000. Historical data shows that after Bitcoin lost the 50-Week EMA, it consolidated within a bear flag before eventually breaking down to its 2022 lows. Currently, Bitcoin appears to be following this pattern after losing the 50-Week EMA and breaking from its October bear flag. “If this plays out, we could see a surge to $100,000, followed by a drop below $70,000,” he remarked.

Similarly, Robert Mercer shared his insights via a series of posts on X, observing that the classic four-year cycle remains intact despite the rise in institutional adoption. He stated,

“Bitcoin is breaking crucial supports one by one and entering a bear market. The same thing happened at the end of 2021. Right now, BTC is forming an ascending channel with its peak near $100,000-$104,000, resembling the clear Right Shoulder of an H&S pattern, akin to movements in early 2022.”

However, he also noted that “no breakdown occurs without a retest,” predicting a relief bounce to the $98,000-$102,000 range, followed by a drop to support levels between $55,000-$60,000.

At the time of writing, BTC is trading at $89,990, reflecting a 2.75% decline for the day. btc, bitcoin, btcusdt BTC's performance on the one-week chart. Source: BTCUSDT on TradingView