Bitcoin’s future seems to be hanging in the balance once again. The cryptocurrency’s value has been oscillating between $61,000 and $104,000 over the past seven months. This pattern bears a striking resemblance to the $31,000 – $64,000 sideways movement observed before the drastic fall in early 2022. The crypto community is divided – some predict a repeat of history, while others anticipate new demand will keep Bitcoin afloat.
Reports suggest that the current price pattern from $61k to $104k closely mirrors the 2020-2021 “distribution zone”, when Bitcoin fluctuated between $31,000 and $64,000 for nearly a year. The subsequent slide was swift and brutal: Bitcoin soared to a peak of about $69,000 in November 2021, then plummeted to a low of $15,600 by November 2022. This represented a nearly 78% drop.
Michaël van de Poppe’s analysis revealed that Bitcoin’s attempts to maintain a level above $106k this month were unsuccessful. His chart displayed a swift rejection at this threshold, leading to long-side liquidations. After failing to push higher, the price retreated to the $104k – $105k zone. Each failed breakout is perceived as a red flag of distribution by traders.
Veteran trader Peter Brandt expressed that strong market fundamentals often appear most promising just before a market peak. He highlighted that if Bitcoin’s current trend results in a similar 78% decline from the $105k band, it could potentially drop to around $23,600. His calculation reflects the previous cycle’s fall from approximately $69k to $15,500.
Despite the technical obstacles, some believe that the floor is more solid now due to reports of spot ETFs and increasing purchases by institutions and governments. Bitcoin has been attracting significant investment flows like never before. However, the failure to breach the $105k barrier has raised concerns among some analysts.
Trader Tardigrade pointed out that Bitcoin’s 50-day and 200-day simple moving averages recently formed a golden cross. This pattern has led to gains of 50%, 125%, and 65% in past cycles. It suggests a potential rally if buyers step in at the current levels.
It’s clear that Bitcoin is caught between caution and optimism. Pattern observers warn of a significant fall if support breaks, while influential players could help prevent a steep decline and trigger a rally. Investors should closely watch the $104k – $105k range for signs of either weakness or strength. A drop below could pave the way for a fall towards $23,500, while a clean break above $106k may indicate the start of the next upward trend. Regardless, volatility is expected to remain high, emphasizing the importance of risk management.
Featured image from Imagen, chart from TradingView, CryptoNewsBTC
