First, let’s break down the 'bearish truth': three consecutive daily declines + death cross of moving averages; is it a real drop or a false breakdown?
Don’t be frightened by the 'three consecutive daily declines'. This drop from 117,000 dollars to 111,000 dollars seems fierce but actually hides three solid pieces of evidence of a 'real drop'; it’s not as simple as a short-term washout.
1. Death cross of moving averages + volume expansion, the bearish trend has been established.
The most deadly is the 'technical double kill':
Death cross of moving averages: the 5-day moving average breaks below the 10-day moving average and then also breaks below the 20-day moving average, forming a standard 'bearish arrangement' - this is a signal that the medium-term trend has turned bearish. Before BTC fell from 69,000 dollars to 48,000 dollars in 2023, it had this moving average pattern; once the bearish arrangement forms, it is very difficult to reverse in the short term.
Volume increase: trading volume during the drop is larger than during the rise - when BTC dropped from 117,000 dollars to 114,000 dollars, the 24-hour trading volume increased from 22 billion USDT to 28 billion USDT; when it dropped from 114,000 dollars to 111,000 dollars, trading volume rose to 30 billion USDT. 'Price drops, volume increases' indicates that selling pressure is continuously being released, not panic selling by retail investors, but large funds are escaping at this opportunity.
Comparing previous pullbacks, when BTC dropped from 112,000 dollars to 108,000 dollars in 2024, it was a 'volume contraction pullback' and quickly rebounded; this time it is a 'volume expansion drop', clearly led by bears in the market, so previous pullbacks should not be compared.
The four-hour rebound is a 'flash in the pan', gaining some but losing it all.
What is even more telling is the four-hour line rebound - after five consecutive declines down to 111,000 dollars, it finally rebounded to 113,000 dollars, but failed to even touch the 113,500 dollars resistance level before being smashed back to 111,000 dollars, with all gains retraced. This kind of 'weak rebound' trend indicates that buying pressure has already been exhausted.
During the rebound, the trading volume is only 15 billion USDT/24 hours, half of the 30 billion USDT during the drop. 'Volume-less rebound' is a bear's 'trap for bulls'.
Sell orders around 113,000 dollars exceed 8 billion USDT, while buy orders are only 3 billion USDT. In a 'more selling than buying' situation, a rebound cannot be sustained and can only continue to drop.
In 2023, every time BTC experienced a 'volume-less rebound + price retracement', it would subsequently drop by 10%-15%. This time, it is very likely to follow this pattern.
113,500 dollars becomes the 'line of life and death'; if it can't break through, it will continue to drop.
BTC's situation is very clear now: to reverse, it must first break through the resistance zone of 113,500 - 114,500 dollars; if it can’t break through, it can only drop to the support levels of 110,500 - 109,500 dollars. However, from the current order book, the resistance at 113,500 dollars is even greater than expected.
Every time the price approaches 113,000 dollars, there are sell orders of 2-3 billion USDT hanging out, preventing the price from moving up.
Even if it occasionally touches 113,200 dollars, it will be instantly smashed down, unable to stand firm.
This indicates that below 113,500 dollars, all funds are looking to 'escape during a rebound'; as long as these funds are not finished, BTC has no chance to reverse and can only continue in a downtrend.
Second, support levels are not a 'lifeline': 110,000 dollars, 109,500 dollars, 105,600 dollars, which can hold?
Everyone is now focusing on the support levels below, but don’t think that just because you reach a support level you can bottom fish - the 'hardness' of these three support levels is different; some can hold rebounds, while others may collapse once broken.
First support 110,500 - 109,500 dollars: short-term buffer, if it holds, it can rebound by 5,000 dollars.
110,500 - 109,500 dollars is the 'recent trading congestion zone'. BTC fluctuated in this range for 3 days before, with a significant amount of capital entering the market to buy, so if it drops here in the short term, there may be a rebound.
If it drops to 109,500 dollars and the trading volume suddenly shrinks (24-hour trading volume below 25 billion USDT) and there are large buy orders over 1 billion USDT, it indicates that buying pressure is starting to strengthen, which can rebound to 113,000 - 114,000 dollars.
However, if it drops to 109,500 dollars and the trading volume is still increasing (over 30 billion USDT), it indicates that selling pressure has not decreased, and this support level is likely to be broken, heading directly to 105,600 dollars.
When BTC drops to 108,000 dollars in 2024, it will be at a trading congestion zone supporting a rebound, but this time the selling pressure is greater. Whether the support at 109,500 dollars can hold depends on the trading volume.
Second support 105,600 dollars: strong support; if broken, it may drop below 100,000 dollars.
105,600 dollars is the 'key support level since 2024'; BTC has bounced back twice from here, and each time it can rise 10,000 - 15,000 dollars, which is considered 'strong support':
If 109,500 dollars is broken, there will be a significant amount of long-term funds entering around 105,600 dollars (such as institutions and whales), as the cost at this position is lower than many institutions’ holding costs.
However, if 105,600 dollars is also broken, and there is volume expansion (24-hour trading volume over 35 billion USDT), it indicates that BTC's medium-term trend has completely turned bearish and may drop below 100,000 dollars, even to 95,000 dollars.
However, from the current situation, the support at 105,600 dollars still seems quite stable; after all, many institutions have positions around 106,000 dollars and won't easily let the price drop below. But if the market continues to worsen, breaking is also possible.
Third, the three most common traps right now: bottom fishing, chasing rebounds, and holding onto positions; don’t fall into them!
In BTC's bearish market, beginners are most likely to make these three mistakes. Once they fall into the trap, they might get stuck or even face liquidation.
Mistake 1: Seeing a drop of 6,000 dollars and trying to bottom fish, entering at 111,000 dollars, only to get trapped at 109,500 dollars.
Some people think 'dropping from 117,000 dollars to 111,000 dollars, a drop of 6,000 dollars, is already very cheap.' They try to bottom fish without waiting for support confirmation, resulting in a drop to 109,500 dollars, with a loss of 1,500 dollars per coin. For example, a fan fully invested at 111,000 dollars is now at a floating loss of 1,500 dollars per coin, anxiously asking 'Should I sell?' - If 109,500 dollars is broken, they will incur a loss of 3,900 dollars per coin.
Remember: 'Just because it has dropped a lot doesn’t mean it can be bottom-fished', especially in a downtrend, where drops of 10,000 or 20,000 dollars are normal. Entering without seeing stabilization signals at support levels is no different from 'catching falling knives'; winning is luck, losing is the norm.
Mistake 2: Chasing after a rebound, entering at 113,000 dollars, only to see it drop back to 111,000 dollars.
Some people see BTC rebound to 113,000 dollars and think 'it has reversed', rushing in, only to see it drop back to 111,000 dollars in just a few minutes, incurring a loss of 2,000 dollars per coin. For instance, today BTC rebounded to 112,800 dollars, and someone bought in at 112,500 dollars, only to see it drop to 111,000 dollars half an hour later, losing 1,500 dollars per coin, and missed the chance to set a stop loss.
Rebounds in a bearish market are mostly 'bull traps'; the higher the rebound, the greater the chance of getting trapped. Unless BTC can break through the resistance level of 114,500 dollars, don’t chase any rebounds, or you will be pressed down by the bears.
Mistake 3: Holding onto positions after getting trapped, entering at 115,000 dollars and not selling when it drops to 111,000 dollars.
Some people hold onto the fantasy that 'BTC will eventually rise again', getting trapped at 4,000 dollars per coin and refusing to sell, resulting in deeper entrapment. For example, a fan entered at 115,000 dollars and is now at a floating loss of 4,000 dollars per coin, still saying 'I want to hold long-term' - if it drops to 105,600 dollars, the loss would be 9,400 dollars per coin. Even if there is a rebound later, it would be hard to recover quickly.
In a downtrend, holding onto positions is the most dangerous operation - it's normal for BTC to drop 1000-2000 dollars daily; the more you get trapped, the more your mentality collapses, and in the end, you might sell at the lowest point, incurring even greater losses.
Fourth, what should be done now? Mainly short, different strategies for three types of people.
Facing BTC's bearish market, the core principle is 'mainly short'; whether you are 'already holding', 'holding cash', or 'wanting to short', you must follow the signals.
1. For those already holding (entered above 113,000 dollars): don’t hold positions, set a stop loss.
If you entered at 113,000 - 117,000 dollars and are now at a floating loss of 2,000-6,000 dollars per coin, set a stop loss urgently, don’t hesitate.
Cost 117,000 dollars: set stop loss at 109,000 dollars; if broken, clear all, don’t wait for 105,600 dollars, or you will incur even greater losses.
Cost 113,000 - 115,000 dollars: set stop loss at 110,000 dollars; if broken, reduce 50% of the position, and look at the remaining 50% for the support at 109,500 dollars.
Don’t average down: averaging down in a bearish market will only increase risk; it’s not too late to average down after stabilization.
For those holding cash: don’t bottom fish, wait for a rebound to short.
If you are holding cash, don’t think about bottom fishing; waiting for a rebound to resistance levels to short is the correct operation.
Short signal: BTC rebounding to 113,500 - 114,000 dollars, and there is a 'volume-less rebound' (hourly trading volume below 1 billion USDT), shorting near 113,000 dollars, set the stop loss at 114,500 dollars, with the target looking at 110,000 - 109,500 dollars.
No entry signal: BTC drops directly without rebounding, or the rebound doesn’t reach 113,000 dollars; continue holding cash, don’t force a short.
Don’t be greedy: if you make 2,000-3,000 dollars from shorting, just take the profit; don’t wait for the support level to break, to avoid being trapped by a rebound.
For those looking to short: use small positions to experiment, don’t go all in.
If you want to short, don’t go all in; use 10%-15% of a small position to experiment.
Entry point: 113,000 - 113,500 dollars, position 10%, no more than 15%;
Stop loss: 114,500 dollars; if broken, accept the loss and don’t hold positions.
Target: First look at 110,000 dollars, reduce 50% of the position when it reaches; then look at 109,500 dollars, clear the remaining 50%.
Remember: there are risks in shorting in a bearish market; if unexpected good news occurs (like ETF approval), you might be caught in a rebound and face liquidation, so always set stop losses.
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