Bitcoin and other cryptocurrency markets are facing historically low volatility levels, with investors showing signs of extreme exhaustion. The largest cryptocurrency fell 0.5% in the past 24 hours to $29,168, with support at $29,000 and could succumb to bears’ attempts to explore areas such as $28,000 and $25,000.

Bitcoin faces a rectangular pattern breakout

The technical outlook on the four-hour chart shows that a rectangle pattern formation could implode, leaving Bitcoin vulnerable to losses. This bearish pattern enables traders to identify breakouts in Bitcoin price and profit from downtrends.

This occurs when the price moves sideways between two parallel horizontal lines, forming a rectangle.

This pattern means that sellers and buyers are in a temporary balance and the price is consolidating (between $28,800 and $30,200) before resuming its downward move.


 

To trade the bearish rectangle pattern, traders look for a breakout of the lower support line at $28,800, which would suggest that sellers have the upper hand and are ready to push prices lower.

A short position can be entered after a breakout with a stop loss placed above the resistance line and a profit target based on the height of the rectangle, which in this case is -4.64% to $27,469.

The weakness in the market structure is validated by the Moving Average Convergence Divergence (MACD) indicator, which is currently issuing a sell signal. The specific manifestation calling for traders to seek short positions in BTC is the blue MACD line crossing below the red signal line.

Moreover, the momentum indicator remains below the moving average (0.00), suggesting that sellers have the upper hand.

According to on-chain analytics firm Glassnode, “Digital asset markets continue to trade within a historically low volatility range, with multiple indicators suggesting that extreme apathy and exhaustion have been reached in the $29,000 to $30,000 range.”

According to Glassnode’s latest insights, “Realized Cap is climbing, but only slightly, which suggests a very boring, volatile, sideways market could be ahead,” attributing it to the waning volatility in the market.

How to deal with Bitcoin's weak market structure?

Despite multiple attempts by bulls, Bitcoin has failed to sustain above $30,000. These failed attacks put pressure on support areas, specifically $29,000, and the lower boundary of the rectangle at $28,800.

Amid short-term market downturns, Bitcoin’s volatility explodes — bad for long-term holders but providing opportunities for day traders to profit.

With this in mind, the Money Flow Index (MFI) indicator shows that the amount of money flowing into the Bitcoin market is currently exceeding outflows.

This means that unless bulls accept short-term pain to pave the way for Bitcoin to sweep up new liquidity at the $28,800 support level, which almost coincides with the 100-day moving average (blue), an immediate recovery is highly unlikely.

If downward pressure from the $29,000 immediate support persists, traders may increase their BTC short exposure, which could trigger a sell-off.

A break below $29,000 would suggest a possible breakout of the rectangle pattern and continued decline towards its target of $27,469. Other support areas to keep in mind include the 200-day moving average (purple) at $27,305 and the June low around $25,000.