Bitcoin Hits Two Month Low, As BTC Breaks H&S Pattern

Bitcoin on Friday breaks through the $26,827 support and further dropped to a two-month lowest of $26,212. Bitcoin has been trading sideways for a few days until Tuesday when it settled around $27,500 in anticipation of the US CPI release on Wednesday.

When the data were released and it was discovered that the inflation rate was significantly lower than projected, the cryptocurrency went on the attack and increased by $800 to a little under $28,400.

As previously reported by TMC, Bloomberg strategist Mike McGlone cautioned that Bitcoin may be the first to fall if the worst is yet to come for risk assets. McGlone drew comparisons to the global financial crisis when the Nasdaq 100 dropped by 55%, as compared to the current 35% drop and it came off true.

Bitcoin Price Analysis: BTC Breaks Head & Shoulder Pattern 

As reported in a follow-through article by TMC, the first signal that BTC could be heading towards a neck decline was confirmed as the price action drew a Head & Shoulder pattern on the daily chart. As per historical trading pattern movements, a Head & shoulder pattern is made by three consecutive peaks where the centre one is higher than the other two peaks making a head-like pattern. This signifies an intense downward movement if the price decline and break through the supporting bottom.

In addition, RSI has been dumping downwards and is at 34 which is considered as an oversold region. Bearish pressure is dominating the price right now and further plummeting could be observed as the volatility has been increasing. 

Source: TradingView

At the press time, Bitcoin (BTC) price is $26,395.69, with a 24-hour trading volume of $18,631,552,175. This indicates a -3.79% drop in the last 24 hours and a -9.30% drop in the previous 7 days. Bitcoin has a market worth of $511,313,404,531 with a circulating supply of 19 million BTC.

As a result, Bitcoin's market worth has dropped to $510 billion, and its dominance over the arts has dwindled to 46.3%. According to CoinGlass, the increased volatility has generated around $150 million in daily liquidations.

Source: Coinglass

The on-chain analysis of the Taker Buy Sell ratio is also looking bearish. This graph depicts the Taker Buy Sell Ratio measure, which reveals whether the bulls or bears are in control. Values over 1 suggest that long traders are executing more aggressively, while values below 1 indicate that the bear is in control.

 Looking at the data, it is evident that this measure has been going lower than one over the previous few months, which might be one of the key reasons why BTC has yet to break beyond $30,000. If the current trend continues, this severe selling pressure might reverse the trend and send the price lower.

So, while Bitcoin has recovered significantly since the beginning of the year, the bear market may not be ended.

Source: CryptoQuant

Conclusion

On all periods, Bitcoin is trading in a negative trend. The important support level of $26,600 should be attentively scrutinised to see whether bears can break it and extend their market dominance. The Fibonacci retracement levels of $25,400 and $24,000 are important support levels to monitor. If bears gain control of the market, the next options expiry might result in more losses for Bitcoin.