Bitcoin has formed a classic bearish pattern on its daily chart, and if confirmed, a price drop to $56,000 could be in the cards.
Key takeaways:
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A developing bear pennant keeps a BTC price drop toward $56,000 in play.
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Rising whale inflows to Binance further the downside outlook.
Bitcoin (BTC) may slide deeper into February as its bearish chart structure converges with renewed whale activity on Binance.
Bear pennant setup hints at 20% BTC price decline
Bitcoin has been forming what appears to be a bear pennant setup on its daily chart.
A bear pennant pattern forms when the price consolidates inside converging trendlines after a sharp drop, called the “flagpole.” It often resolves with another leg down, roughly matching the initial decline.
BTC/USD daily price chart. Source: TradingViewOn BTC’s chart, the structure emerged after the steep sell-off toward the $60,000 zone. The price has since compressed into a tightening triangle while remaining below key moving averages, signaling weak momentum.
A decisive breakdown beneath the pennant support may open the door to a move below the $56,000 mark, about 20% below the current levels, in February.
Conversely, a break above the pennant’s upper trendline, aligning with the 20-day exponential moving average (20-day EMA; the green wave) at about $72,700, may invalidate the bearish setup altogether.
Whale inflows on Binance add to bearish BTC setup
As of Tuesday, Bitcoin’s whale inflow ratio (seven-day average) had spiked to a record high of 0.619 compared with 0.40 at the month’s beginning, according to data resource CryptoQuant.
The ratio compares exchange inflows from the 10 biggest BTC transactions to total inflows. Its rise, according to Darkfost, a CryptoQuant-associated analyst, can be interpreted as rising sell-side pressure from whales.
Bitcoin whale inflow ratio (Binance). Source: CryptoQuantBitcoin’s durable bottom is near
Matrixport’s signal introduces a short-term counterbalance to the bearish setup.
As of this week, Matrixport’s Greed & Fear Sentiment Index triggered a potential bottoming signal: The 21-day moving average has dipped below zero and is now turning higher.
Bitcoin sentiment hits extreme lows. Source: MatrixportHistorically, that combination has lined up with “durable bottoms,” implying sellers may be running out of momentum.
Related: Bitcoin accumulation wave puts $80K back in play: Analyst
That doesn’t rule out another flush lower, but it raises the odds of a relief bounce before any sustained breakdown takes hold.
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