Key Takeaways:
- Bitcoin plunges below $20K during risk-on selloff.
- The drop has come closer to triggering a classic bearish continuation setup.
- Next BTC price target: ~$10,000
YEREVAN (CoinChapter.com) — Bitcoin (BTC) looks ready to undergo a 45% price drop as risk-on sentiment dampens amid recession fears. The token’s downside scenario emerges out of a classic bearish continuation setup.
Bitcoin forms a bear pennant
Notably, Bitcoin’s price has been forming what appears to be a “bear pennant,” a technical pattern that appears when the price fluctuates between a falling trendline resistance and rising trendline support, followed by a strong move downside. It resolves after the price breaks below the lower trendline.
Bitcoin has not pursued a breakout out of its pennant range so far. But as BTC price nears the structure’s apex, its likelihood of doing so is higher.
Suppose Bitcoin undergoes a breakdown move. Then, as a rule of technical analysis, it could drop as much as the height of the previous trend, also called the “flagpole.”
That puts BTC’s price on the road toward $10,000, down 45% from July 1’s price.
Recession fears
Bitcoin slipped below its $20,000-support level during the New York trading hours on June 30, much in line with traditional markets—including the Nasdaq Composite and the S&P 500—that underwent similar declines.
Quarter-end rebalancing, a time when funds examine and adjust their portfolio assets, may have contributed to the ongoing Bitcoin selloff. Meanwhile, persistent fears about recession, led by the Federal Reserve’s quantitative tightening policy, have also been adding up to the prevailing selling sentiment.
Nonetheless, on-chain indicators reveal that investors have been waiting on the sideline to let the macroeconomic storm pass, so they could buy Bitcoin back for discounts.
“Everyone is talking about bearish things, but most of them haven’t left the crypto market. They’re just waiting for the bottom,” noted Ki Young Ju, the CEO of data analytics platform CyptoQuant, adding:
“Bitcoin market cap decreased by -70% from the top while stablecoin went down by just -11%,”
That shows that traders’ have merely shifted their capital to the stablecoin market after the recent Bitcoin selloff, raising the possibility that they would re-deploy the U.S. dollar-pegged tokens to buy the next BTC price dip.
