The value of Bitcoin (BTC) has experienced a substantial decrease from its peak in March 2024, dropping from approximately $74,000 to below $60,000. This decline can be attributed to a variety of factors, including the long-awaited Mt. Gox reimbursements, the sale of seized BTC by the US and German governments, and the unwinding of the yen carry trade’s impact on global markets.

These developments have raised concerns about whether Bitcoin’s price will continue to decrease or if a recovery is imminent. Despite the recent correction, over 84% of Bitcoin addresses remain profitable, according to data from Glassnode.

However, historically, such high levels of profitability have coincided with local market tops, often signaling significant price corrections. When the percentage of profitable addresses exceeded 90%, Bitcoin tended to face increased selling pressure, primarily from investors seeking to secure profits amid fears of a potential market downturn.

This high level of profitability may continue to put downward pressure on Bitcoin’s price. A closer examination of Bitcoin’s weekly price chart suggests that the cryptocurrency may follow past market trends.

The chart reveals that local peaks in price, characterized by significant resistance, aligned with overbought conditions in the Relative Strength Index (RSI), leading to sharp declines. Currently, Bitcoin’s RSI is displaying similar overbought signals, along with weakening bullish momentum, pointing to a potential drop toward the 200-week Exponential Moving Average (EMA), a crucial support level around $36,750, down about 38% from the current price levels.

On the other hand, Bitcoin’s price could experience a bullish reversal from its 50-week EMA if its RSI holds above 41, its prevailing support level. While the bearish indicators are concerning, there is also potential for a bullish reversal in Bitcoin’s price action. The weekly chart highlights a Bull Flag pattern, which, if confirmed, could propel Bitcoin back toward its previous high of $80,000.

Bull flags typically resolve when the price breaks above the upper trendline and rises by as much as the height of the flagpole. Applying the same technical rule to the current BTC price action yields $80,000 as the ultimate bull flag upside target.

Fundamentally, the potential rate cut by the Federal Reserve in September and a persistent holding sentiment among Bitcoin’s long-term investors could bolster the bull flag breakout scenario, according to Glassnode’s latest on-chain report.

Journalist Yashu Gola, who has been focusing on cryptocurrency markets since 2014, offers insightful analysis on this developing situation in the cryptocurrency market. His work has been featured in publications such as Cointelegraph, CoinChapter, and he previously served as the chief editor for NewsBTC.

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