Yesterday, the Bitcoin price broke from the apex of the descending triangle pattern dropping to $8160 in Coinbase (near 200 MA) and as the new analysis suggests, retrace to $7500 is a possibility. Key factors contributing to the build-up of negative sentiment and causing massive sell-off were:

Underwhelming response to Bakkt launch where the firm managed to sell approx. 72 monthly Bitcoin futures contract on day-1 of launch.

A significant 30% drop in the Bitcoin hash rate in a single day. A new record.

As reported in our previous analysis, the Bitcoin price momentum could be suggesting an alternate trend than previously believed. To many, the previous trend was a triangle pattern but in the mist, a new pattern has emerged known as descending channel. Current Bitcoin price trend analysis suggests that the latter may be true and the hypothesis should not be completely ignored.

Bitcoin Price Analysis: Emergence of a descending channel pattern.

Traders who believe Bitcoin price is likely to remain within its descending channel can initiate trades when the price fluctuates within its channel trendline boundaries. However, do take into account a breakout either on the upper or lower side of the channel boundaries.

Possible scenarios:

If the Bitcoin price breakout from the upper side of the channel’s boundary, then the descending channel could be a continuation pattern. It could signal the finish of corrective wave and the start of the next impulse wave. Key signals to watch for:

Bitcoin price quickly and sharply moves in the direction of the breakout.

A series of runaway gaps and an exhaustion gap all in the same direction.

Break above the resistance zone near $10,500.

If the Bitcoin price manages to successfully break above the $10,500 resistance zone and holds the zone as support, the BTC price can continue to move upwards and target a new all-time high record.

However, given the current circumstances, the drop may be far from over. Assuming that we are witnessing the corrective phase, we could see the Bitcoin prices retrace to as far as $7500. In case, the price does not hold near $7500, a drop to $6250 level is expected before the Bitcoin price starts to show signs of recovery.

A breakout from the lower boundary of the channel seems to be unlikely at this moment.

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