The price of the first cryptocurrency corrected nearly 8% from its historical high of over $124,000 in four days. Technical indicators point to the risk of further decline.
Analyst under the nickname Captain Faibik pointed out the breakout of the 'rising wedge' pattern on the daily chart. Traders consider the figure a bearish signal that precedes a sharp decline.
According to long-term observations, in a bull market, the 'rising wedge' plays out in 81% of cases. The average potential profit for 'bears' after its formation is 38%.
According to Captain Faibik, the breakout of the wedge's support line indicates weakening momentum and increased pressure from sellers. The nearest support is in the range of $110,000–112,000. Losing it will open the way to levels of $105,000–108,000.
If selling intensifies by September, the price may fall into the 'psychological' zone of $98,000–100,000.
In the worst case, the decline will reach $88,000, according to Cointelegraph analyst Yashu Gola.
According to his forecast, the scenario will become irrelevant if Bitcoin holds above the 50-day exponential moving average (EMA). In this case, the price may return to the upper boundary of the wedge around $125,000.
Analysts at Swissblock also noted the formation of a 'double top' on the weekly chart.
The pattern resembles the situation in 2021 when the asset price dropped by 77%, Gola noted. If the pattern plays out similarly, Bitcoin risks falling to the 50-day EMA around $94,750 by September.
On-chain metrics
According to Glassnode, the number of addresses with a balance of more than 10,000 BTC has fallen to a yearly low.
The number of wallets with 1,000-10,000 BTC has also decreased. This indicates profit-taking by large holders near recent highs.
However, the current price cycle differs from 2021, Gola emphasized. Back then, the Fed was reducing stimulus measures, whereas now, according to CME FedWatch data, the market expects a rate cut in September.
Swissblock noted that liquidity inflow could offset technical weakness and maintain Bitcoin's upward trend.
In July, CoinDesk analyst Omkar Godbole warned of the exhaustion of Bitcoin's bullish momentum.
