Bitcoin (BTC) Drops to $89,000: Can It Still Recover from Here? Price Analysis

Bitcoin (BTC) dropped as low as $89,270 early on Tuesday. The last major horizontal level and the last major trendline have been breached. Bitcoin is now rapidly descending into a bear market … or is it?

The writing is on the wall for a bear market … isn’t it?

It’s said about bear markets, and especially those pertaining to Bitcoin, that when price first descends into the bear market there is a strong sense of disbelief. This was certainly the case in November 2021. The price had just made a higher high after a huge correction, and with everyone waiting for a blow-off top that never came, the price just quietly sank into a ruinous bear market.

It could be the case now that a similar sentiment pervades the market. All the signs of a beginning bear market are there. The price has broken down through key supports which have heralded previous bear markets, and yet there are those who still believe that a recovery is possible. 

A recovery needs to start now

Source: TradingView

So here we are, in the short-term time frame, below a major trendline which began in mid-October 2023, and that has held through most of the bull market till now. If there is to be any faint hope of a recovery it needs to start now. The main positive is that the $BTC price is heavily oversold. Price does not keep going down, it is like the tide going in and out, and it looks like after a good period of the tide going out, it is about to come in again.

It just remains to be seen how quickly and strongly that can be. If the bulls are only able to take the price back to the major trendline and the upturn weakens there, this would likely just be a confirmation of the breakdown, and it would be ‘bear market here we come’.

In addition, if the bulls are able to get back above the horizontal support level they would be faced with strong resistance, not only from the major trendline, but also from horizontal resistance, plus the minor downtrend lines.

If the bulls can surmount all of this, they will have deserved this last opportunity to save the day and force a continuation of the bull market.

Descending channel continues to play a role

Source: TradingView

The daily chart for the $BTC price brings the descending channel back into focus. This channel is continuing to play a major role in the fortunes of $BTC, and right now, it can be seen that should the bulls succeed in bringing the price back above the horizontal support, this would include the bottom trendline of the channel. From here, the serious assault on the major trendline could begin.

The bottom of the chart shows the indicator line in the RSI descending into oversold territory. Some kind of a bounce should be incoming.

Can bulls clutch the last straw?

Source: TradingView

In the weekly chart the bears can be clearly seen to be winning as things stand. The $BTC price is below the 0.618 Fibonacci, the major trendline, and the bottom trendline of the descending channel. To make things even worse, the 44.00 level in the RSI has been breached. This would normally signal a descent into a bear market.

Is there any straw that the bulls can still grab hold of in order to extricate themselves? It’s quite simple really. By the end of the week the price needs to be back above the major trendline, and that should put it back above the 0.618 Fibonacci, which is another major horizontal level. 

What are the chances of this happening? Bitcoin is very oversold, and all the momentum indicators have reset. However, liquidity drying up is what has caused this dump in the first place, so can it be replaced quickly enough? That remains to be seen.

I leave you with an excerpt from analyst and entrepreneur Raoul Pal, who posted this on X:

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.