Bitcoin Price At Risk Of 50% Correction As BTC’s 2022 Bearish Playbook Repeats

As the crypto market recovers from the latest pullback, Bitcoin (BTC) is attempting to bounce from its one-month low. Some analysts have warned that the correction has left the cryptocurrency in a “fragile position” that resembles the start of the previous bear market.

On Sunday, Bitcoin saw a 3.6% intraday decline, closing the day below its yearly opening for the first time. Since November, the flagship crypto has been hovering between $86,000-$93,500 in the weekly timeframe, failing to turn the range’s resistance into support despite multiple attempts.

As the chart shows, the cryptocurrency formed a bear flag pattern after the initial drop from its cycle top of $69,000.  At the time, the cryptocurrency tested and rejected the 100-day Moving Average (MA), leading to a pullback towards the pattern’s lower boundary.

This was followed by a rebound towards the formation’s upper boundary, where the 200-day MA was located, and a rejection from this area, which led to a breakdown from the pattern and 55% correction.

This time, Bitcoin has rejected from the 100-day MA and is currently retesting the pattern’s support line. Based on this, he suggested that the flagship crypto could see one more leg up toward the 200-day MA, located around the $100,000 barrier, before “the real show” begins.

This coincided with the loss of a higher low structure that had been building similarly to 2021. “Losing that Higher Low is significant, as it removes a key structural buffer that could have supported continued consolidation within the Weekly Range,” he asserted.

The rejection has shifted focus to the strength of the $86,000 support and the character of the upcoming rebounds from this area. He warned that shallower bounces from the range lows would suggest weakening demand, increasing the chances of a breakdown below this support.

This adds “importance to the integrity of this support, as any early breakdown would represent a shift relative to that typical timing.” At the moment, the weekly range remains pivotal, “acting as the key decision point between a prolonged relief structure and the risk of deeper downside,” the analyst concluded.