After a short-lived recovery, Bitcoin (BTC) is attempting to bounce from a crucial level to reclaim the $110,000 support. However, some analysts suggest that a retest of the $90,000 level could be the next stop for the cryptocurrency.
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Bitcoin Drops To Weekly Lows
Bitcoin lost the $110,000 support for the first time in nearly two months, dipping below the lower boundary of its local range, between $108,700-$119,500. The flagship crypto hit an eight-week low of $107,900 on Friday afternoon, raising concerns for its short-term rally among investors.
Crypto analyst Ali Martinez suggested that the market is starting to show signs of fatigue, with Bitcoin Dominance displaying cracks after carrying “the bulk of the bull market momentum.”
To the analyst, BTC’s current price action signals a macro trend shift, mirroring the 2021 price action and the conditions that preceded the 2021 cycle peak. At the time, the cryptocurrency hit a peak of $60,000 in April, retraced, rallied to $70,000, and set a strong bearish divergence against the Relative Strength Index (RSI) before the bear market began.
This time, Bitcoin is showing the same setup that foreshadowed the end of the last cycle, with price making higher highs while the RSI makes lower lows, Martinez explained.
Among other technical signals, the analyst highlighted that the MACD indicator had turned bearish this week. He detailed that this bearish crossover aligns with the price drop and reinforces the downside risks.
Meanwhile, he added that the recent death cross in the Bitcoin MVRV Momentum indicator “signals a macro momentum reversal from positive to negative. This is a historically reliable warning sign of cyclical tops.”
The analyst affirmed that the on-chain evidence suggests Bitcoin’s top may be in, at least temporarily, with bias shifting bearish and a risk of retesting lower support levels.
Will BTC Mirror Its 2021 Drop?
Martinez also noted that the $108,700 support is crucial for BTC’s short-term performance, as a weekly close below this area would confirm a deeper trend shift, which occurred in 2021.
After peaking in late 2021, the flagship crypto lost its local range above the $58,000 mark, which led to a retest of the macro range’s mid-zone and an eventual drop below the macro range’s lows in the coming months.
If BTC loses its immediate technical floor, the price could retest the $104,500 and $97,000 support levels, risking a drop to the mid-zone of the macro range, around the $94,000 area.
Altcoin Sherpa weighed in on the cryptocurrency’s performance, stating that Bitcoin should have strong support between the $103,000-$108,000 levels, as the 200-day Exponential Moving Average (EMA) sits around the $104,000 mark.
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However, analyst Ted Pillows considers that $124,000 appears to be the local top. He explained that, historically, Bitcoin’s bottoms occur after a retest of the weekly 60 EMA, which currently sits around the $92,000 support zone and has a CME gap.
“In this scenario, Bitcoin will start a reversal after 3-4 weeks and a new ATH by November/December,” Ted concluded.
As of this writing, Bitcoin trades at $107,947, a 7.5% decline in the weekly timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
