Bitcoin (BTC) is flashing early signs of a deeper correction, as the latest recovery pauses at $93,000. New analysis shows Bitcoin’s “market structure” increasingly resembles the first quarter of 2022, which marked the beginning of the bear market.
Key takeaways:
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Bitcoin’s onchain structure mirrors early 2022, risking a deep bear market if key levels are lost.
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Bitcoin’s bear flag targets a $68,100 BTC price.
Bitcoin onchain data hints at early bear market
Bitcoin has dropped toward and found support near its True Market Mean, currently at $81,500, according to Onchain data provider Glassnode.
The True Market Mean, or the Active-Investor Price, represents the cost basis of all non-dormant coins, excluding miners.
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“This level often marks the dividing line between a mild bearish phase and a deep bear market,” Glassnode said in its latest Week On-chain report, adding;
Bitcoin: True Market Mean. Source: GlassnodeThe chart above shows that the BTC/USD pair traded above this level from Jan. 22 to May 5, 2022. When BTC dropped below this level on May 6, the price lost a further 61%, bottoming at $15,500 in November of that year.
The resemblance is corroborated by a Supply Quantiles Cost Basis model, which tracks the entry price of the largest coin clusters. Since mid-November, Bitcoin’s price has fallen below the 0.75 quantile, now trading near $96,100, placing more than 25% of supply underwater.
This has created a highly “fragile balance between the risk of top-buyer capitulation and the potential for seller exhaustion to form a bottom,” Glassnode wrote, adding:
Bitcoin: Supply quantiles cost basis. Source: GlassnodeCryptoQuant’s Bull Score Index offers a more granular view after falling sharply since August and dropping below 40 in October. The metric has remained flat throughout November despite short-term price volatility.
The latest reading falls within the 0-20 range, deep within bearish conditions, similar to the levels observed in January 2022, as shown in the chart below.
Bitcoin: Bull Score Index. Source: CryptoQuantAs Cointelegraph reported, Bitcoin’s price action is showing other similarities with the 2022 bear market.
Bitcoin’s bear flag targets $69,000
Bitcoin’s latest recovery attempt was rejected by stiff resistance around $93,000, data from Cointelegraph Markets Pro and TradingView shows.
This level corresponds to the yearly open and the upper boundary of a bear flag, as shown on the two-day chart below.
A break and close below the flag’s lower boundary at $91,000 will validate the bear flag, opening the door for a fresh downtrend toward the measured target of the pattern at $68,150, or the previous all-time highs of 2021. Such a move would bring the total losses to 27%.
BTC/USD two-day chart. Source: Cointelegraph/TradingViewMomentum indicators, including the relative strength index, or RSI, remain sluggish at 40, suggesting that market conditions still favor the downside.
As Cointelegraph reported, the bearish pattern will be invalidated if the bulls push the price above $96,000, supported by a positive Coinbase Premium.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
Source: https://cointelegraph.com/news/bitcoin-looks-increasingly-like-it-did-in-2022-can-btc-price-avoid-68k?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
