Bitcoin’s price continued to fall sharply on Tuesday, following a significant drop on Monday. The decline only halted when the price reached the key support level of $66,000. While the price is currently bouncing back a bit, further price drops are still possible in the near future.
Relief bounce into very negative market sentiment
The price has fallen about 20.6%, or $17,000, from its recent high. This is a significant drop, but further declines are still possible.
Looking at the 4-hour chart, Bitcoin’s price dropped sharply after breaking below the recent bearish pattern, heading directly towards the key support level around $66,000. Because the price fell so quickly, it’s now considered oversold, and a temporary bounce – a relief rally – is likely, and we’re already seeing that happen.
As a researcher, I’m watching price action closely, and it’s currently testing a new resistance level around $67,200. However, it’s not just this resistance that buyers need to overcome. There are two downward trends acting as obstacles. The shorter one stems from the recent breakdown of a bearish flag pattern, and until we see a break above this, I anticipate further downward movement. The longer trendline also guides the price down through the same bearish flag, and I’d expect at least a temporary bounce back to confirm if the breakdown is valid.
In my analysis, I’m noticing a consistent pattern across shorter time frames: the Stochastic RSI lines are currently low and trending upwards. This suggests potential buying pressure, but it’s happening against a backdrop of generally negative market sentiment. I’m wondering if this conflict might lead to a period of sideways price action, or even the formation of another bearish flag pattern. It’s a tricky situation, balancing potential gains against prevailing negativity.
Oversold vs. negative sentiment = bear flag?
The bear flag pattern shown on this daily chart is just a possible scenario, not a prediction. It might not be perfectly accurate in length, but it helps illustrate how Bitcoin’s price could behave if the market turns strongly downwards, as opposed to simply experiencing a temporary dip. Ultimately, the price could either rise further from here or continue falling, depending on how buyers and sellers react.
Right now, sellers are dominating the market. While buyers briefly pushed the price up to the upper limit of the recent bearish pattern, it ultimately remained a bearish signal. Since that upward move failed, the price has consistently been falling.
Bitcoin is currently in a prolonged downturn. We need to see a clear low point and significant selling pressure before prices can begin to rise again.
200-week SMA could help to predict bear market bottom
Looking at the weekly Bitcoin price chart, it’s striking how closely the price is approaching a key upward trendline that signals a bull market. The 200-week Simple Moving Average has mirrored this trendline almost perfectly, and both could act as strong support levels, potentially preventing a significant price drop.
Looking back at the last bear market, Bitcoin’s price did drop below its 200-week moving average. During that time, the price fell about 33% from that average. If a similar drop happened now, it could bring the price down to around $40,000. Currently, a price of $44,700 is predicted as a potential target after breaking out of a recent pattern. Could we see a bottom form around that level?
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2026-06-03 13:09