Bitcoin’s BTC$70,483.40 Price action gives us a sense of deja vu, but it’s not the good kind.
If you look at price movements since early February, a very specific and eerie pattern has formed that is strikingly similar to the setup we saw between November and January. This setup eventually paved the way for a catastrophic drop to nearly $60,000.
We are looking at what technical analysts often refer to as a counter-trend recovery – a gradual pullback within a downtrend.
This is the chart. Check the two yellow channels.
Bitcoin daily chart. (Trading View)
The first yellow channel on the left shows price changes from November 20th to January 20th. At the time, Bitcoin was trading in a narrow range, with a slight upward trend after falling from $100,000. Prices seemed to be recovering, but in reality, it was just a pause in a larger downtrend, or a small rebound.
As a result, the price eventually broke below the bottom of its trading range. Essentially, what level traders were treating as a “floor,” or support, collapsed, and Bitcoin plummeted in a straight line from about $90,000 to nearly $60,000 by February 6th.
Now look at the second channel on the right.
Since hitting these lows in early February, Bitcoin has once again been trading in a narrow uptrend, sitting perfectly between these two trend lines.
The similarities with previous patterns are undeniable. The current relief rallies lack the explosive momentum of the November-January pattern. Grind upwards slowly and choppyly. In technical analysis theory, this is a sign of bullish exhaustion and the market is simply holding its breath before the bears recharge their engines.
What’s next?
Charts are not the holy grail and past performance does not guarantee future results. Still, traders are using them to read market sentiment, and right now we’re telling the story of a “buy-on-the-moment” crowd that lacks strength and conviction.
If Bitcoin breaks below the current channel’s lower trendline near $65,800, it could signal a return to bearish control.
The important thing is that Bitcoin is at a critical decision point. If prices break below the channel formation, as some are predicting, the bear market could deepen further. If it breaks out above the channel, the downtrend may lose momentum and the bulls may make a strong comeback thereafter.
