Bitcoin, 57% Crash Nightmare Revived...Bullish Hopes Shattered

▲ Bitcoin (BTC), Bear Market/AI Generated Image

Bitcoin (BTC) is re-testing the bottom of a 110-day bear flag, intensifying warnings of a further sharp decline. While the market sentiment is already deeply bearish, an analysis suggests that if the long-term chart structure breaks down, the past instance of a 57% crash could reignite fear in the market.

According to crypto media outlet The Crypto Basic on May 29 (local time), Bitcoin has fallen more than 4% since the beginning of this week, reaching a critical support zone of a long-formed bear flag. Bitcoin has maintained a weak price trend since being rejected at the 200-day moving average in early May and is heading towards four consecutive bearish trading days and three consecutive weekly declines.

Analyst CryptoCon analyzed that Bitcoin is nearing the bottom of the bear flag on the daily chart. Bitcoin fell to a local support level near $60,000 in February and then moved within that structure for 110 days, forming higher highs and higher lows. The recent decline has led to a re-test of the lower support line that has sustained the price for 110 days, and CryptoCon anticipates a potential breakdown to lower price levels.

Another basis for the bearish outlook is the re-test of the upper resistance line. Bitcoin first tested the ascending resistance line on March 16, rising to $76,000, and then approached the upper boundary for a second time on May 6, rebounding to $82,800. Since then, Bitcoin has fallen 11% to $73,700.

While there are cases where prices move inversely when market sentiment is overly negative, CryptoCon believes that in this structure, negative sentiment alone makes it difficult to prevent a potential collapse. He assessed this bear flag as the longest bearish structure since November 2021 and analyzed that the effect of crowd sentiment reversal is limited in strong bearish patterns formed in higher time frames.

Past precedents are also a concern. The Crypto Basic reported that Bitcoin entered a bear flag in January 2022, remained there for 100 days, collapsed in April, and then fell approximately 57% from $40,794 to $17,585. If the same pattern repeats, Bitcoin could drop from $73,700 to $31,500. However, the article also mentioned a structural shift where Bitcoin rebounded from $15,000 to an all-time high of $126,200 after a bear flag and capitulation phase that lasted from November 2021 to November 2023.

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