Bitcoin has broken below the bottom of its short-term triangle consolidation pattern, which appears to be a bearish flag when zoomed out. The breakdown suggests that a slide of the same height as the flag’s mast could follow.

This mast spans $4,250 to around $3,650 so the drop could be around $600 tall. The 100 SMA is also below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This means that the slide is more likely to gain traction than to reverse. The moving averages are also close to the triangle top to serve as dynamic resistance as well.

RSI is pointing down, also indicating that sellers have the upper hand. However, the oscillator is already dipping into the oversold region to indicate that bears are tired. Turning higher could confirm that buyers are ready to take over again.

Stochastic is also pointing down and has plenty of room to head further south before hitting the oversold region, which means that sellers have more energy left.

Bitcoin was unable to sustain its rally from the first few weeks of February as traders seemed disappointed over the lack of momentum or other catalysts. The climb was seen to have been spurred by bullish forecasts and expectations of stronger institutional volumes this month, and traders continue to wait for more evidence of that.

Still, Fidelity looks ready to push through with its platform launch that might draw more inflows from banks and funds. However, this pickup in volumes might wind up dampening volatility or sudden moves. After all, more and bigger market players are coming in so price action might be smoother from here.

For now, traders might be in wait-and-see mode or liquidating some of their holdings for fear of another leg lower or speculations that the price is far from bottoming out.

Images courtesy of TradingView