Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

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Between highs above $4,500 and falls below $3,800, Bitcoin has been in a downtrend for the better part of a year. But now, the price has taken out the critical $3,800 mark that has become a line of demarcation for psychological support. This marks a significant low for the cryptocurrency as it approaches the end of its correction from the run that saw prices rally from $2,000 to $4,500. As the stock chart shows, this is only the second time Bitcoin has broken below $3,800.

Bitcoin has been trading sideways since mid-April. The price action has been very clean, and the market is clearly showing signs of exhaustion. The last two candles formed a nice bearish chart pattern. The next candle is short-term resistance, and the final candle is a bit of a confluence of a previous pattern that formed in December.

Bitcoin (BTC) has had a rough week, with the $32,000 mark being crossed on Friday, November 9. While the market has bounced a little bit during the weekend, it made a big move from the $32,000 low to the $33,000 high. I want to highlight the way I see the market forming for Bitcoin (BTC). On a daily timeframe, I can see a classic bearish chart pattern forming. Price action is suggesting that the buyers have run out of steam. A breakdown below $33,000 would mean the bulls are likely to be in for a tough ride.. Read more about bitcoin price history chart and let us know what you think. Proponents of Bitcoin (BTC) should hedge, at least in terms of graphic specs.

The main cryptocurrency continued its price decline in the new weekly session, reaching $32,105 ahead of the London opening ceremony, after falling about 10% intraday. This raises the prospect of a retest of today’s quarterly low at $30,000, which could lead to either a bearish breakout or a bullish pullback.

Bitcoin is consolidating between $30,000 and $42,000. Source: TradingView

Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

But as traders grapple with the current medium-term trend conflict in the bitcoin market, a classic technical pattern has emerged that reinforces the bearish outlook.

Upside down cup

The so-called Inverse Cup and Pen pattern, discovered by Keith Waring, an independent market analyst, suggests that a sustained downward price correction is likely in the bitcoin market. The pattern occurs when assets form a large crescent as they rise and correct downward, followed by a less extreme rebound on the way up.

Traders consider the cup and reverse handle pattern as a signal to open short positions to reach lower levels. The most extreme fall target in such a case is determined by measuring the distance from the top of the cut to the level of the model break.

In addition, traders usually recognize breakout levels when the price breaks out of a descending moving handle pattern accompanied by higher volume.

Bitcoin The inverted Cup and Handle formation indicates a bearish breakout. Source: Keith Waring, TradingView

Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

Based on Wareing’s chart, bitcoin’s recent price action – from a jump to nearly $65,000, then a drop to $30,000, and a drop back to $40,000 – broadly confirms the inverted “cup and handle” structure.

Moreover, the price of bitcoin is still waiting for a bearish breakout.

Back in the game pic.twitter.com/aqLVazTK8J

– Keith Wareing (@officiallykeith) June 21, 2021

The gloomy Bitcoins sentiment came as traders assessed the Federal Reserve’s turnaround on interest rates and inflation. Last week, the Federal Reserve indicated that it may raise interest rates as early as late 2023 instead of 2024 to curb rising inflation.

James Bullard, a Fed official, said separately Friday that the central bank could raise interest rates as early as 2022.

Fed Chairman Jerome Powell also said Wednesday at a news conference that his body will talk about reducing the $120 billion in monthly asset purchases that began in March 2020.

Bitcoin and other pandemic winners, including gold and Wall Street stock indexes, fell in tandem due to the Fed’s hawkish tone. At the same time, the U.S. dollar index, which measures the greenback’s strength against a number of major currencies, rose to a two-month high, indicating renewed investor appetite for cash.

More downward projections appear

The recent drop in bitcoin prices was also triggered by reports that China is tightening measures against cryptocurrency mining companies in the region. The state-backed Global Times reported that authorities in Sichuan province have ordered miners to cease operations.

Sichuan is home to the second largest cryptocurrency mining community in China. The latest ban means that 90 percent of China’s mining capacity, which accounts for 75 percent of the world’s computing power, has likely been taken offline, the Global Times writes.

The bitcoin hashrate fell to a November 2020 low following the announcement of the Chinese crackdown.

Bitcoin’s hash rate fell to 140.3 EH/s for the first time in six months. Source: Blockchain.info.

Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

Jeffrey Ross, founder and CEO of Vailshire Capital Management, said he expects bitcoin to remain weak for the next one to three weeks, as he fears a sell-off at the end of Chinese miners.

However, he added that the macro outlook for the cryptocurrency remains bullish as long as it maintains key technical targets above the 12- and 48-month moving averages.

A breakout of bitcoin below its 12-month moving average threatens to wipe out its market valuation by more than 50%. Source: Jeffrey Ross, TradingView

Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

Bitcoin’s 48-month moving average is currently at $13,000.Bitcoin has been in a downtrend since the end of December and the problem is that the price of BTC has been dropping and the volume is low. As with every downtrend, a wave 4 will be formed and its chart pattern is a classic bearish chart pattern formed by wave B.. Read more about bitcoin chart live and let us know what you think.

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Emilia James
By Emilia James

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