While Bitcoin (BTC) continues to lose crucial support levels, an analyst has shared three possible scenarios for the flagship crypto’s upcoming performance, raising the alarm about potential early signs of a bear market.
On Monday, Bitcoin reached a new multi-month low after dropping below $93,000 for the first time since May. The cryptocurrency started the week dropping nearly 5% from the $96,000 area and retesting the $91,000 level as support.
Most recently, the flagship cryptocurrency closed the week below the 50-week EMA, which has raised the alarm for several market observers.
As a result, BTC’s recent performance signals the first step of a potential breakdown, the analyst warned:
A full breakdown unfolds in three parts: first, a Weekly Close below the key level; second, a post-breakdown relief rally that turns that level into new resistance; and third, downside continuation that completes the bearish confirmation.
Rekt Capital stressed that the 50-week EMA will be crucial in determining whether BTC’s bullish trend and tendency for “benign downside deviations” still hold.
He emphasized that if the flagship crypto fails to reclaim this indicator as support and it turns into a resistance, it could be transitioning from its downside deviation tendency to the early stages of a confirmed bearish trend.
Based on this, he shared three potential outlooks for BTC’s performance. The best-case scenario for Bitcoin would be reclaiming this indicator and successfully ending this correction as a downside deviation, as it would suggest that BTC remains in a bull market.
Meanwhile, the worst-case scenario would see the cryptocurrency’s price unable to retest the 50-Week EMA, even as resistance, and directly enter the downside acceleration phase.
Nonetheless, the analyst noted that, historically, the third scenario doesn’t appear as likely if we have already entered a bear market. Instead, he concluded that the recurring “relief-rally scenario” into the 50-week EMA before downside continuation seems more likely.
