Bitcoin Faces a Bearish Setup That Could Redefine Market Expectations
Bitcoin, known for its volatile market movements, has been facing new challenges as bearish signals begin to cloud optimism. After failing to decisively move past the $88,100 resistance level, Bitcoin is currently trading near $87,700, marking over a 3% loss for the week. While a recovery from the $80,500 support level had initially instilled hope among traders, emerging data suggests the potential for another retest and even further declines.
What is Triggering Bitcoin’s Current Challenges?
One of the first red flags is the hidden bearish divergence spotted on Bitcoin’s Relative Strength Index (RSI). Between November 18 and November 24, the RSI indicated a higher high while Bitcoin’s price created a lower high. This divergence is often seen during downtrends and serves as a precursor to continued bearish movement rather than a reversal.
This aligns with the wider downtrend that started back in early October. If this pattern plays out as suggested, we could see Bitcoin retesting the $80,500 low or even breaking below it.
The Role of Exponential Moving Averages
Another crucial warning comes from Bitcoin’s exponential moving averages (EMAs). The 100-day EMA is on the verge of crossing below the 200-day EMA—a bearish crossover often associated with weaker trend strength. This worrying development is compounded by the proximity to the $88,100 resistance zone, a key level for short-term recovery.
For a recovery to gain traction, Bitcoin must establish a clean daily close above $88,100. If this doesn’t happen, the wider bearish theme could dominate, further weakening Bitcoin’s structure.
On-Chain Analysis Fuels Concerns
On-chain data deepens the bearish outlook. Since November 16, wallets holding between 1,000 and 10,000 BTC have been reducing their holdings. The wallet count fell from 1,984 to 1,962 as of November 25. This whale-level selling follows a pattern observed in early November, which saw Bitcoin drop 8% shortly after a similar reduction in holdings.
What Comes Next for Bitcoin?
For bulls to regain control, clearing the $88,100 level is critical. A decisive breakout could pave the way for targets at $93,800 or even $107,400 if momentum strengthens significantly. However, without this breakout, Bitcoin risks breaking below $80,500, which could confirm an additional drop of 8.32% from current levels.
Despite temporary gains, the bearish indicators leave traders cautious. Long-term investors may want to monitor whale activity and broader market trends before making strategic decisions. Short-term traders, on the other hand, should prepare for potential downside risks.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult a professional before making investment decisions.
