BTC Closes Below $69,000 Weekly: Bulls Done or Relief Ahead? (Feb 23 Update)

A weekly close below the $69K major horizontal level has either confirmed that the next leg down in the Bitcoin bear market is about to begin, or it is yet another flush-out of investors who are desperately hanging in there. Is a recovery still possible from such a position, or was this the death knell?

Sentiment at all-time low

Source: Alternative.me

According to the Crypto Fear & Greed Index at Alternative.me, the crypto market is in Extreme Fear right now, at a reading of 5. Only once before in the life of this index did the market sentiment come down as low as 5, and this was at the end of August 2019 when the $BTC price was on its way back down to a bear market double bottom.

Lower highs and lows

Source: TradingView

Does the short-term time frame agree with the joint lowest market sentiment on record? The $BTC price did fail to get back to the major horizontal support, and made a lower high in the process. The drop then took the price down to a lower low. If these are signs of weakening before a further big correction, then there is probably good reason for the terrible sentiment.

That said, as the two small descending channels illustrate in the chart above, this could also be a period of absorption of the very rapid descent which has taken the price from the very top to around half of its value in less than 5 months.

Bearish descending triangle emerges

Source: TradingView

Moving out into the daily time frame another pattern emerges. This time it’s a descending triangle. Not a bullish pattern, but it remains to be seen in which direction the price will go. The majority of times, price would fall through the bottom of a descending triangle, so bulls need to be very aware of this. 

It can be seen that the bottom of the triangle corresponds quite closely to the horizontal support level at $65,500. If the pattern does play out to the downside, the full extent of the measured move would be to $58,300, which would make a lower low, but also another potential attempt at a double bottom.

Lower end of current range is $53,000

Source: TradingView

The 2-week chart shows precisely what the bulls are up against. A candle body has clearly opened below the major horizontal level at $69,000. In the weekly time frame it’s absolutely apparent that a candle body has closed below this level, so it is for this reason that $69,000 is now labelled as resistance, although in the 2-week time frame there is still the possibility of what would be an incredibly bullish close above this level. The $BTC price has the rest of this week in which to accomplish this.

Going back to the more probable scenario of a continuation into the bear market, or a potential bottoming process, if one looks left, the entirety of the 8-month bull flag is the range the price is descending into. The price entered this when it passed $69,000, and the bottom of the range is marked by the horizontal support line at $53,000, which also happens to be the exact extent of the measured move out of the bear flag.

It could be that the $BTC price spends a few more weeks bouncing between the support and resistance levels formed by that long bull flag, plus the double tops of the 2021 bull market. 

On the other hand, gold and silver are probably due to rise again. Will Bitcoin just sit there as the metals soar skywards? This doesn’t seem a very likely scenario.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.