Bitcoin "Sandwiched" Between Two Major Zones as Price Exceeds $71,000 – Is a Significant Move on the Horizon?

As Bitcoin (BTC) tests key resistance levels with its price bouncing back above $71,000, analysts warn that the ongoing bear market may persist, and this recent uptick might be temporary.

Key Takeaways

Bitcoin is currently testing crucial resistance levels above $71,000 and $69,000.
Analysts highlight the importance of these levels as overhead resistance due to previous all-time highs.
Current support lies around the 50-month Moving Average (MA) at approximately $64,000-$65,000.
The cryptocurrency’s recent bounce could be short-lived, with further downside expected in the longer term.
Market analysts suggest potential similarities to the 2022 cycle, indicating the possibility of prolonged consolidation and market corrections.

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Bitcoin has seen a marked recovery, climbing 7.5% from recent lows and re-approaching the $71,000 mark, leading to important reflections on market dynamics. Analysts hint that the cryptocurrency might be encountering significant selling pressure at previously established resistance levels, suggesting that further downward movement could occur in the near future.

Bitcoin's Attempt to Reclaim its Former All-Time Highs

On Tuesday, Bitcoin's price experienced a significant increase of 7.5%, climbing from its low over the weekend towards the $71,000 mark. This is the second time in a week that Bitcoin has retested this critical level before pulling back towards the $69,000 range.

Over the past month, Bitcoin has been fluctuating between the $63,000-$71,000 price range, with a brief surge above this upper limit during last week's market recovery. However, despite making numerous attempts to break out, Bitcoin has been unable to maintain its gains due to ongoing market volatility.

In a recent analysis, market observer Rekt Capital noted that Bitcoin is currently interacting with two vital resistance levels that have emerged: the all-time highs (ATHs) from 2021 and 2024, at approximately $69,000 and $71,300, respectively. These levels transformed into resistance during the monthly timeframe after Bitcoin closed February at $66,970. Since then, BTC has been unable to reclaim these levels after multiple tests.

Instead, the cryptocurrency has registered upward spikes above $69,000 and $71,300, indicating that these former ATHs are acting as rejection points in the short term and could become critical resistance if Bitcoin fails to close above them at the end of the month.

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BTC could change its previous ATHs into points of resistance. Source: Rekt Capital

For Bitcoin to change this prevailing structure, Rekt Capital stated that it must close above $69,000 by the end of March. This would position BTC to potentially reclaim the 2021 all-time high as support. Similarly, to establish a reclaim process for the 2024 all-time high at $71,300, Bitcoin would likely need several monthly closes above this level.

Could the BTC Bounce Be Brief?

While Bitcoin's former ATHs may pose a risk of becoming resistance, Rekt Capital also highlighted that the cryptocurrency is finding essential support at the 50-month Moving Average (MA), situated around the $64,000-$65,000 range. Historically, Bitcoin has reacted positively from this level during bear markets but eventually loses this support.

The recent bounce from the 50-month MA allows Bitcoin to challenge the previous ATHs as resistance "for now." However, should Bitcoin break down below this moving average, it typically becomes a new resistance point, followed by further declines.

At present, "Bitcoin is effectively sandwiched between two pivotal reactive zones," Rekt Capital noted, suggesting that there could be short-term relief before a longer-term downward trend continues. The analyst also emphasized that BTC may be only halfway through its current bear market, leaving room for further declines. Notably, in a recent post, he pointed out that Bitcoin's shortest bear market lasted around 365 days, while the current downturn has surpassed 150 days.

Other market analysts believe that Bitcoin might follow a pattern similar to the 2022 cycle, where it retraced significantly from the peak, consolidated for months, and encountered a final bull trap before hitting another major correction towards the market bottom.

At the time of writing, Bitcoin's price stands at $71,307, reflecting a 3% increase within the daily timeframe.

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BTC's performance illustrated on the one-week chart. Source: BTCUSDT on TradingView