Bitcoin is facing renewed volatility as a head-and-shoulders pattern gains strength after last week’s brief fakeout. This well-known technical pattern has been developing over the past two months, signaling potential bearish momentum as it aligns with a significant decline that has pushed Bitcoin (BTC) below the crucial $100,000 benchmark. Investors are increasingly cautious, questioning the cryptocurrency’s capacity to recover quickly.
Bitcoin May Repeat History
The Chaikin Money Flow (CMF), a popular indicator among traders, is currently revealing a significant rise in outflows from Bitcoin. Recently, the CMF has dropped to a 16-month low, a level not seen since July 2024. This decline suggests that investors are acting with caution, pulling back their investments, and expresses growing skepticism regarding Bitcoin’s potential for a swift rebound.
Sponsored
As outflows continue to rise, it indicates a waning confidence among traders. This trend may leave Bitcoin vulnerable to additional price weakness. Skepticism is thickening in the air, while liquidity appears to soften, amplifying the risk of an extended downturn. Should this trend persist, it becomes progressively unlikely that BTC will manage to hold onto vital support levels in the near future.
Want more token insights like this? Sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here.
The macro momentum for Bitcoin is also showing signs of weakness, particularly as its exponential moving averages approach what is often termed a “Death Cross.” Historically, similar setups have resulted in average declines of around 21% before markets stabilize. This raises the risk of a more pronounced pullback if BTC fails to regain its footing in the immediate future.
In fact, a comparable decline could push Bitcoin’s price closer to the $89,400 level. Although past performance does not guarantee future results, the current market structure resembles previous bearish phases when downward momentum intensified, further fueling concern among investors.
BTC Price Can Note A Reversal
As it stands, Bitcoin is trading at approximately $96,851, precariously balanced just below the crucial psychological support level of $100,000. This threshold has been breached four times in the past month, reflecting indecision and mounting pressure from sellers in the market. Overall, market sentiment remains fragile, as BTC grapples with increased volatility.
The emergence of the head-and-shoulders pattern suggests a potential decline of around 13.6%, closely aligning with a target price of $89,407. Should Bitcoin fail to maintain the $95,000 support, the likelihood of a downward move toward this level increases, especially in light of the ominous Death Cross looming on the horizon.
However, should investor demand strengthen, Bitcoin may have the potential to reclaim the $100,000 milestone as support. A significant bounce from this level could pave the way toward $105,000, effectively invalidating the bearish thesis and restoring trader confidence for a renewed upswing.
