Key Takeaways
Bitcoin reached yet another all-time high price in January. After a shaky start,t, which briefly took the BTC price below $90,000 on Jan. 13, BTC regained its footing and reached a new all-time high of $109,356 on Jan. 20.
The rest of the crypto market did not follow, as evidenced by the increase in the Bitcoin Dominance Rate (BTCD), which is close to its cycle high of 61.55%.
Since the high, Bitcoin has shed over 10%, sparking fears of a potential bear market. The bearish sentiment is exacerbated by the fact that altcoins have seen steeper losses.
With that in mind, let’s look at the price movement in different time frames and see if this is true.
Bitcoin closed January at a high of $102,429, the highest-ever monthly close, surpassing that of December 2024. Despite the positive close, the Bitcoin price fell after its all-time high of $109,588, ending the month with a slight decline.
The bearish momentum continued in February, leading to another decline to a low of $96,821, sparking fears that the bear market has started.
There are some similarities to the 2021-2022 Bitcoin market cycle top. The most discernible one is the bearish divergence in the monthly Relative Strength Index (RSI), though even that was much more pronounced in the previous cycle high.
The Moving Average Convergence/Divergence (MACD) did create a bearish divergence in the previous cycle but has not done so in the current one.
The price movement is also different since the previous cycle created a double top while the current one has not.
While the monthly time frame can still be considered bullish, the weekly one cannot. The BTC price has created a double top pattern (black icons) and two long upper wicks.
Furthermore, BTC deviated above the $100,000 horizontal resistance area and created a bearish engulfing candlestick last week; all considered bearish signs.
Moreover, the RSI has created a lower high and is falling, while the MACD just made a bearish cross (black circle).
Therefore, the long-term time frames lean bearish. While the monthly one can be considered undetermined, the weekly BTC chart paints a decisively bearish outlook.
Bitcoin’s wave count suggests the price is nearing the end of its upward movement. BTC is in the fifth and final wave of an increase that started in November 2022 (red).
While wave five can extend further, it has already reached a Fibonacci level suitable for the end of the market cycle since it has the same length as waves one and three combined, and the price has reached the 1.61 external Fibonacci retracement of the previous correction.
The sub-wave count (white) also shows a completed five-wave increase for wave five. In case of an extension, wave five can reach a high between $142,000 – $155,325.
A closer look at the move for sub-wave five shows that the BTC price is at a critical level that can determine whether the bear market has started.
Currently, the Bitcoin price trades at a confluence of support levels near $93,500, created by the 0.786 Fibonacci retracement support level and by giving waves A:C a 1:1.61 ratio.
As long as BTC bounces at the current level and begins an upward movement, the entire decline may just be part of sub-wave five. In this bullish scenario, the minor sub-wave count is in yellow.
However, if BTC breaks down from this support, especially if it falls below the wave four low (red) of $89,185, it will confirm that the bear market has started, leading to much lower prices.
Bitcoin’s price has shown extreme weakness despite reaching a new all-time high in January. The entire bullish cycle may have ended unless Bitcoin breaks out from its corrective channel and reclaims $100,000 soon.
If, on the contrary, Bitcoin decreases below $89,200, it will confirm that the bear market has started.