A very dangerous pattern is forming
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Bitcoin price remained in a tight range this week as concerns about the industry continued. The BTC/USD pair was trading at 26,000, where it has been in the past few days. Similarly, the BTC/GBP was stuck at 20,522, which was much higher than last Friday’s low of 19,762.
Bitcoin flash crash
Bitcoin and other cryptocurrencies continued plunging last week as concerns about the industry rose. As it dropped, Bitcoin moved below the important support at $28,300, where it failed to move below in July.
There are numerous reasons for the crash. Technically speaking, Bitcoin formed a double-top pattern, which is one of the most accurate bearish signs in the market.
At the same time, analysts cite the performance in the derivatives market. Data compiled by CoinGlass showed that open interest worth over $2.5 billion was cleared in a few hours.
This perforance is notable since implied volatility in the options market had crashed to an all-time low earlier tis month. This volatility has now somewhat recovered following the recent plunged.
As shown below, cumulative volume delta (CVD) has been in the green in the past few days. Weighted open interest has risen while aggregated liquidations have remained substantially low.
Looking ahead, the next likely catalyst for Bitcoin price will be the upcoming meeting at Jackson Hole in Wyoming. This is an annual meeting of central bank officials from around the world. Jerome Powell and other officials will talk about the current state of the economy and the potential actions.
Bitcoin price forecast
The 4H chart shows that the BTC/USD pair has been in a strong bearish trend in the past few months. The chart shows that Bitcoin has moved below the 50-period and 25-period exponential moving averages (EMA).
Most importantly, Bitcoin price has formed a bearish flag pattern. In price action analysis, this pattern is usually a bearish sign. Therefore, there is a likelihood that Bitcoin price will have a bearish breakout in the coming days, with the next level to watch being at $25,000.
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