Bitcoin Bullish Hopes Fade as Weekend Decline Signals a Deeper Drop

The recent decline in Bitcoin prices has raised concerns among investors and traders. Over the weekend, Bitcoin plummeted below $78,000, marking its lowest value since April. This drop is attributed to profit-taking, declining liquidity, and a lack of new buyers entering the market.

Market Dynamics and Bullish Sentiment Deteriorates

Traders have observed that previous rallies, once fueled by strong corporate demand, particularly purchases from MicroStrategy (MSTR), have lost momentum. This shift leaves market participants vulnerable to forced sales and derivative liquidations. According to a recent analysis, Saturday’s decline is part of a broader bearish trend that has been forming for several months.

Expert Opinions on Bitcoin’s Future

Eric Crown, a former options trader at NYSE Arca, has been vocal about his concerns since late October. He argues that Bitcoin is currently in a lateral to bearish phase. Crown states, “I do not believe that $80,000 represents a macro low for Bitcoin.” He suggests that recent price actions may indicate a more extensive corrective regime.

Many option traders are increasingly betting on a decline below $75,000, abandoning their bullish bets aiming for $100,000. The value of active put options at the $75,000 level on the Deribit platform has reached approximately $1.159 billion, nearing the notional open interest of $1.168 billion tied up in call options at $100,000.

Bearish Signals and Technical Indicators

• The MACD monthly indicator recently crossed downward, a rare signal historically associated with prolonged downturns.
• The 21-week exponential moving average against the 55-week has moved into bearish territory, typically preceding several months of losses.
• The annual chart closed with a “shooting star” candlestick pattern, often indicating a medium-term reversal.

Additionally, Bitcoin has detached from traditional markets since October, declining while stocks and other risky assets have remained stable. Crown indicates that this behavior typically points to late-cycle disengagement, as investors tend to sell off speculative assets first.

Looking Ahead: Possible Price Ranges

While Crown’s outlook is somewhat cautious, he believes Bitcoin could experience a further downturn to the $50,000 to $60,000 range before stabilizing. He views this potential dip as an opportunity for long-term position accumulation rather than a completion of the broader crypto cycle.

In summary, as Bitcoin bullish hopes fade, traders and analysts are reevaluating their strategies in light of prevailing market conditions and expert projections.