What’s Next as Bitcoin Retests 110-Day Bear Flag Bottom

Bitcoin has dropped to a critical price point in a long-forming bear flag amid weak price action, and speculation of a breakdown is building.

This bull flag bottom comes as Bitcoin ($BTC) has declined by over 4% since the start of this week. It is on course for its fourth consecutive daily red candle and third straight downtrend week, with the price looking weak since the rejection from the 200-day MA earlier in May.

Key Points

Bitcoin has dropped to a critical price point in a long-forming bear flag amid weak price action.

$BTC entered this bear flag in February and has stayed within it for 110 days.

The heavily negative sentiment would not have much effect on such a strong bearish formation on higher timeframes.

When Bitcoin last consolidated within a bear flag for at least 100 days, it dropped 57%.

Bitcoin Nears Strong Support

CryptoCon shared in a recent analysis that Bitcoin is near the bottom of a bear flag on the daily chart. The recent downtrend has forced a retest of the structure’s lower support, an area that has held prices for 110 days.

$BTC entered this bear flag in February, dropping to the local support near $60,000. Since then, the cryptocurrency has consolidated within the flag, making higher highs and higher lows. Now at this crucial support, the analyst expects a breakdown to much lower prices.

Bitcoin Bear Flag Formation/CryptoCon

Aside from the obvious weakness, another reason CryptoCon is predicting a bearish outcome is that Bitcoin has recorded the second major retest of the upper boundary. The coin made the first visit to the ascending resistance on March 16, when it climbed to $76,000.

The second was the recent ascent to $82,800 on May 6, and it has since dropped 11% to its current price of $73,700.

Bitcoin Breakdown Despite Negative Sentiment

Notably, market sentiment has a way of affecting market trends. When the crowd is overly negative, the market usually moves in the opposite direction. However, CryptoCoin does not see that preventing the impending breakdown.

The analyst highlighted that this is the longest bear flag since November 2021. As such, the heavily negative sentiment would not have much effect on such a strong bearish formation on higher timeframes.

While he did not provide the target, history provides context. When Bitcoin consolidated within a bear flag for at least 100 days, it dropped considerably. For context, the crypto asset entered a bear flag in January 2022, stayed for 100 days, then broke down in April 2022.

Subsequently, Bitcoin dropped from $40,794 to $17,585, representing a nearly 57% crash. If history repeats, the asset could fall to $31,500 from its current price of $73,700. Notably, this is well above the $10,000 target for Bloomberg’s analyst Mike McGlone.

Storm Before the Calm?

Meanwhile, many analysts view the current market as the storm before the calm. Historically, this is part of the crypto winter, where prices trend sideways for a prolonged period of time to consolidate on earlier gains.

Interestingly, $BTC eventually recovers from this phase. Even CryptoCon’s chart analysis shows this. After a series of bear flags and capitulation between November 2021 and November 2023, the coin entered a distribution channel. Eventually, a structural shift started from there, spurring the rally from $15,000 to its current all-time high of $126,200.