Bitcoin prices have been under pressure for the past few months, rising from an October high of $126,300 to a current high of $95,785. This crash mirrors the ongoing performance of other cryptocurrencies. So how far can a top blue-chip company fall?
Bitcoin price technical analysis on daily chart
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The daily timeframe chart shows that BTC price has crashed over the past few months. The stock has plunged more than 20% from its all-time high and entered a bear market.
Bitcoin has formed a double top pattern at $124,350 and a neckline at $107,440. The distance between the top and neckline is approximately 14%. Measuring the same distance from the neckline, the target value would be around $92,000, which is significantly lower than current levels.
Bitcoin is also forming other bearish signs. For example, we moved it below the super trend indicator. A death cross pattern is also forming as the spread between the 50-day and 200-day exponential moving average (EMA) narrows.
Bitcoin has fallen below the 38.2% Fibonacci retracement level. Therefore, the daily pattern points to further downside and may suggest a psychological point at $90,000. A move below that level could point to further downside and reach the 61.8% retracement level at $78,830.
Bitcoin Price daily chart |Source: TradingView
BTC price prediction on weekly chart
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The weekly chart shows that Bitcoin price is now falling further as it forms a risky ascending wedge pattern. This is a unique pattern formed by two rising and converging trend lines. A bearish breakout usually occurs when two lines are about to converge.
The distance between the widest parts of this pattern is approximately 46%. Measuring the same from the breakout point means it could quickly crash to the psychological point of $56,000.
BTC Price Weekly Chart |Source: TradingView
Why Bitcoin is in a bear market
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There are several reasons why Bitcoin is in a strong bear market. First, there are signs of fatigue among BTC holders, with BTC underperforming other assets. Gold is up 55% this year, up less than 3%.
The S&P 500 and Nasdaq 100 rose 14% and 18%, respectively. As such, there are signs that investors are dumping Bitcoin for these assets.
Second, Bitcoin fell as many large investors sold it. According to recent data, long-term holders have released more than $45 billion worth of coins in the past few months.
Third, demand for Bitcoin ETFs has waned, with these funds shedding $1.1 billion worth of coins in the last week. It lost $1.2 billion and $798 million in the past two weeks. As a result, the cumulative inflow of Bitcoin funds was approximately $58.8 billion, down from $65 billion at the beginning of this year.
Moreover, the continued decline in futures open interest caused Bitcoin prices to plummet. Interest has retreated to $66 billion from a year-to-date high of $94 billion, the data shows. A drop in open interest indicates low demand for the coin in the futures market.
There are other main reasons why Bitcoin prices have plummeted over the past few months. These include a decline in the Fear and Greed Index and a decline in the probability that the Federal Reserve will cut interest rates.
Additionally, new capital flowing into Bitcoin is limited, with inflows to stablecoin exchanges remaining stable at $87 billion. Additionally, Bitcoin finance companies continue to struggle.
