The cryptocurrency market is once again holding its breath as Bitcoin (BTC) grapples with a significant price correction, with some analysts drawing unsettling parallels to the onset of its 2022 bear market. Following a recent pullback, the flagship cryptocurrency is attempting to rebound from a one-month low, yet experts warn its current "fragile position" could precede a substantial downturn, echoing historical patterns.
Market Echoes of 2022 Bearish Trend
Bitcoin recently experienced a 3.6% intraday drop, closing below its yearly opening price for the first time on Sunday. For months, BTC has oscillated within a narrow weekly range of $86,000 to $93,500, repeatedly failing to establish the range's resistance as solid support. Although an early January surge saw Bitcoin climb 11.5% to nearly $98,000, it has since surrendered those gains, now resting precariously at the base of its range. Market observer Philaretkt highlights the striking similarities to Bitcoin’s 2022 price action, where a bear flag pattern emerged after a drop from its $69,000 cycle top. Back then, a rejection from the 100-day Moving Average (MA) precipitated a fall to the pattern’s lower boundary, followed by a bounce to the 200-day MA, another rejection, and ultimately a 55% correction. In the current scenario, Bitcoin has again been rejected by the 100-day MA and is retesting the pattern’s support line. Philaretkt suggests a potential final push towards the 200-day MA, around the $100,000 mark, before what he terms "the real show" unfolds.
BTC's Precarious Position and Key Support Levels
Adding to the concern, Rekt Capital describes Bitcoin as being in a "particularly fragile position." The analyst emphasizes that weekly closes marginally above key levels make subsequent retests "structurally precarious." Bitcoin's recent sharp rejection from the $98,000 region, where the 21-week and 50-week Bull Market Exponential Moving Averages (EMAs) reside, is a critical development. This rejection has coincided with the loss of a "higher low" structure, which had been developing similarly to 2021, removing a crucial buffer for consolidation. The immediate focus is now on the robustness of the $86,000 support level and the nature of any impending rebounds. Rekt Capital cautions that shallow bounces from these range lows would signal weakening demand, significantly increasing the likelihood of a breakdown below this crucial support. Historically, such strong rejections leading to sustained downside continuation often manifest later in the cycle, typically at the end of Q1 or early Q2. However, Bitcoin is already testing its weekly range's lower boundary, making the integrity of this support exceptionally vital as the market stands at a critical juncture between extended relief and the looming threat of deeper price declines.
