Is a Deeper Bitcoin Decline Possible? What Do Historical Events Indicate?

• A detailed analysis conducted by respected crypto analyst Rekt Capital highlighted a recurring bearish fractal in Bitcoin’s historical price data.
• In simple terms, a bearish fractal signals the potential for a price decline. Such a pattern emerges when the peak price is surrounded by two consecutive lower highs in bars/candles.
• Another critical point is the retesting of the lower high resistance. Even if the price surpasses this resistance, it will likely continue the bearish trend with consecutive rejections.

A renowned crypto analyst compared past events in Bitcoin’s history to make predictions about whether BTC’s price will experience further declines.

Could Bitcoin Experience Further Price Declines?

A comprehensive analysis conducted by respected crypto analyst Rekt Capital emphasized a recurring bearish fractal in Bitcoin’s historical price data, increasing the likelihood of a collapse below $20,000. This pattern, which appears to be resurfacing in the 2023 market, was frequently observed in 2019 and 2022.

This model utilizes a fractal indicator that identifies potential turning points by highlighting recurring price patterns on price charts. In essence, a bearish fractal signals the potential for a price decline. Such a pattern emerges when the peak price is surrounded by two consecutive lower highs in bars/candles. An upward arrow typically indicates a bearish fractal, indicating the potential for a price drop.

The essence of this bearish pattern begins with a double top. Contrary to expectations, this double top is often not invalidated with a swing below a significant support level. Instead, the price typically sees a relief rally, forming a lower high and eventually collapsing below the previously mentioned support level.

This support then transforms into a new resistance level, pulling the price even lower. This sequence was observed in both 2019 and 2022, and the current scenario in the 2023 market seems to reflect the initial stages of this pattern. Rekt Capital suggests that the market is likely in the middle of this bearish fractal, with uncertainty about where the relief rally might end.

When examining potential scenarios in more depth, the analyst believes Bitcoin’s price could rally to approximately $29,000 before experiencing further declines. Critical events to watch for include potential extensions beyond the bull market support band. If Bitcoin fails to retest this band as support after breaking out, the bearish fractal remains valid.

Another important point in Bitcoin

Another crucial point to consider is the revisit of the lower high resistance. Even if the price surpasses this resistance, it will likely continue the bearish trend with consecutive rejections. However, there are criteria that can invalidate this bearish perspective: the bull market support band (blue) consistently remains as support, weekly closes above the lower high resistance below $28,000, and surpassing the $31,000 yearly peak.

Regarding other technical indicators, Rekt Capital highlighted that Bitcoin recently rose above the 200-week moving average (MA). However, this 200-week MA is currently acting as resistance. Additionally, the 200-week MA aligns with the lower high resistance, presenting a critical juncture for Bitcoin’s price in the near future. Despite Bitcoin’s overall macro bullish outlook, Rekt Capital notes that Bitcoin has yet to surpass the lower high resistance at $28,000.

On the daily chart, Bitcoin is trading just above the 38.2% Fibonacci retracement level. It’s crucial for Bitcoin to maintain a position above this level since it is above the established trendline (represented in black).