Bitcoin Price Analysis: Bearish Technical Setups Suggest Lower Prices Ahead

Bitcoin price analysis: Technical setups suggest that Bitcoin could drop to as low as $21,750 in the coming months.

Posted 8 months ago in Bitcoin


Bitcoin price chart showing a downward trend

Bitcoin (BTC) price continues to tread at depressed levels in what has become one of the crypto market's quietest periods in history. Meanwhile, several technical and fractal setups suggest that the BTC/USD pair could drop to as low as $21,750 in the coming months. Let's take a closer look at the nearest support levels to determine just how low can the Bitcoin price go.

Bitcoin has consolidated inside a horizontal trading range since mid-August 2023, defined by $26,670 as resistance and $25,650 as support. Briefly, BTC price broke out of the range in reaction to fundamental news, such as new Bitcoin ETF applications and the FTX liquidation fears. But overall, traders have kept the BTC price inside the $25,650-26,670 range.

Looking broadly, this range appears like a "bear flag," a bearish continuation pattern characterized by a consolidation channel forming after a strong downtrend. As a rule of technical analysis, bear flags resolve after the price breaks out of their range to the downside and falls by as much as the previous downtrend's height. Applying these parameters to the ongoing Bitcoin price consolidation brings its bear flag target around $23,000. In other words, BTC price can drop nearly 15% from current price levels by the end of the year.

Bitcoin's bear markets since 2017 have typically exhausted near a common ascending trendline support, as shown below. BTC price tested the trendline in November 2022 at around $16,750 and has since increased by 70%. That said, Bitcoin may have already bottomed out in the ongoing bear market. However, the price will need to decisively break above its 0.236 Fib line near $28,350 to confirm its long-term bullish recovery based on the historical fractal — which it just failed to do.

Bitcoin now treads below the 0.236 Fib line, raising possibilities of a retreat toward the bear market trendline support that's also near $23,000. Bitcoin inches closer to forming a death cross between its 50-day (the red wave) and 200-day (the blue wave) exponential moving averages (EMA). That is Bitcoin's third death cross formation during the Federal Reserve's interest rate hike period, with the previous two crossovers preceding 17-18% price declines. Therefore, should the fractal play out again, the bearish BTC price target in this case will be at around $21,750.

The views, thoughts, and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Last updated 9/17/2023, 11:41:24 AM

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