Bitcoin (BTC) is retesting the resistance levels as the price recovers the $71,000 mark. However, one analyst has warned that the bear market is expected to continue and the latest rebound could be short-lived.
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Bitcoin Eyes regains former all-time high resistance
On Tuesday, Bitcoin rose 7.5% from Sunday’s low towards the $71,000 area, retesting this key level for the second time in a week before temporarily moving back to the $69,000 level.
The cryptocurrency has been trading between the $63,000-$71,000 price range for the past month, briefly rising above the upper limit during last week’s market rally. However, BTC’s price has failed to maintain its multiple breakout attempts amid the market volatility.
On a Monday analysisMarket watcher Rekt Capital noted that Bitcoin is interacting with two key levels that form “a major overhead resistance”: the 2021 and 2024 all-time highs (ATHs) of $69,000 and $71,300, respectively.
As the analyst explained, these levels turned into resistance in the monthly time frame after the flagship cryptocurrency closed at $66,970 in February. Since then, BTC has repeatedly tested these key levels from below in the daily time frame but has failed to regain them.
Instead, it has produced upside wicks above $69,000 and $71,300, indicating that the former ATHs are acting as rejection levels on shorter time frames and could become a key resistance if the monthly price were to close below these levels.
“For Bitcoin to change this structure, the price would need to be above $69,000 at the end of March Monthly Close to position itself for a recapture of the 2021 All Time High as support,” the analyst said.
“Similarly, the 2024 All Time High at $71,300 would likely require multiple monthly closes above the level to properly establish a clawback process,” he added.
Short-lived BTC bounce?
While the former ATHs are at risk of turning into resistance, Rekt Capital noted that Bitcoin is currently finding crucial support at the 50-month moving average (MA), around $64,000-$65,000.
Historically, the flagship crypto has initially reacted from this level in bear markets, but ultimately loses as support. The recent rebound from the 50-month MA allows BTC to “tentatively” test the 2021 and 2024 ATHs as resistance.
However, once the collapse occurs, the level usually becomes new resistance before further downward continuation. Now “Bitcoin is effectively sandwiched between two major reactive zones,” he confirmed, which could lead to short-term relief before the medium-term downtrend continues.
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The analyst too observed that BTC appears to be only halfway through the bear market, leaving the door open for further downside developments. In an X post, he noted that BTC’s shortest bear market lasted about 365 days, while the current one currently lasts just over 150 days.
Other analysts have suggested that the cryptocurrency could follow the 2022 cycle playbook. At the time, the price retreated significantly from the cycle peak, consolidated for months, and then had a final bull trap before beginning its second major correction wave towards the bottom of the market.
At the time of writing, Bitcoin is trading at $71,307, up 3% on the daily time frame.
Featured image from Unsplash.com, chart from TradingView.com