A widely followed analyst warns that Bitcoin (BTC) may be mirroring a bearish 2021 pattern that caused a massive collapse in its value.
The analyst known under the pseudonym Rekt Capital tells his 562,400 followers on X that Bitcoin is forming a similar macro descending triangle on the monthly chart that preceded a 55% drop in 2021.
“Whenever we see these bases of these triangles occur, they tend to weaken over time. They first establish themselves with the first overextension. We saw that the overextension in 2021 was 100% here. This overextension was not very exuberant, but we saw that the bounce that took place after was a little more exuberant, but then after that higher high, we just dropped to lower macro highs.
If that downward macro high occurs, it is necessary to respect the new bearish macro trend that is developing. If this is, in fact, the context of an early stage bear market, then that higher low will simply expire and become invalid, because we will not be able to overcome the macro downtrend of the descending triangle.”
Looking at its chart, analysis suggests that if Bitcoin falls below the support level around $84,552, which forms the base of the descending macro triangle, it is likely confirmation that a deeper correction is coming.
The analyst also says that if Bitcoin breaks out of the descending trend line, it would indicate a possible bullish reversal.
“If we break that downtrend, we may turn a little more bullish, but until then, we have more evidence to support that maybe we will continue into 2021.”
Bitcoin is trading at $84,037 at the time of writing, down 4.58% on the day.
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