Bitcoin The price action is giving us a feeling of déjà vu, and it is not the good kind.
If we look at the price swings since early February, a very specific and ominous pattern is forming that looks strikingly similar to the one we saw between November and January. That setup ultimately paved the way for a crushing sell-off to nearly $60,000.
We are facing what technical analysts usually call a countertrend recovery: a modest rebound within a downtrend.
Here is the graph. Watch the two yellow channels.
The first yellow channel, on the left, shows the price action from November 20 to January 20. Back then, bitcoin was trading in a tight range, with a slight bullish tilt after a drop from $100,000. It looked like the price was recovering, but in reality it was just a pause (or a small bounce) within a broader downtrend.
The result was that the price eventually fell below the bottom of that trading range. Essentially, the level that traders had been treating as a “floor” or support gave way, and bitcoin plummeted straight from around $90,000 to nearly $60,000 on February 6.
Now look at the second channel on the right.
Since hitting those lows in early February, Bitcoin has returned to trading in a tight range with an upward slope, neatly contained between those two trend lines.
The similarity with the previous model is undeniable. The current relief rally lacks the explosive momentum that the November-January pattern had. It is a slow and choppy ascent. In technical analysis theory, this is a sign of bullish exhaustion, with the market simply pausing for breath before the bears recharge their engines.
What’s next?
Charts are not the holy grail and past performance does not guarantee future results. Still, traders use them to read market psychology, and right now, they are telling the story of a “buy the dip” crowd that lacks strength and conviction.
If bitcoin falls below the lower trend line of its current channel, around $65,800, it could signal a return of bearish control.
The bottom line is that bitcoin is at an important decision point. The bear market could deepen, as some anticipate, if prices fall below the channel formation. If it breaks through the channel, the downtrend could lose strength and the bulls could come back strong.
