Is the Bitcoin Bear Trap Over? Price Patterns Suggest a Potential Parabolic Surge

Bitcoin is encountering substantial resistance around the $62,000 mark, and a breakthrough could lead to the liquidation of over $845 million in leveraged short positions.

Is the Recent Drawdown a Bear Trap?

Market analysts suggest that the recent price correction could indeed represent a bear trap, which occurs during a long-term uptrend when selling pressure creates an artificial dip in prices.

A notable analyst, known by the pseudonym Sensei, posited that the latest decline may have been a shake-out. In a recent post, he questioned:

“So, that was a shake-out or a Bear trap?”

Additionally, Sensei pointed out that Bitcoin’s fractal patterns indicate the potential onset of a parabolic price phase.

Fractals serve as tools for traders to discern critical support and resistance levels, as well as to identify possible trend reversals based on historical behavior.

Despite signals indicating a local bottom, analyst Aurelie Barthere from Nansen cautioned that Bitcoin’s overall daily trend might still be bearish.

“Local bottoms, yes, but the daily trend in BTC (and Ether) still looks negative: The 50-day moving average is about to cross below the 200-day moving average,” she noted in her analysis.

Facing Resistance at $62,000

Bitcoin’s immediate resistance level is identified at $62,000. According to Barthere, this level must be crossed for BTC to advance towards the $70,000 mark and ultimately challenge its all-time high.

“BTC must sustain above $62,000. The subsequent resistance level is between $70,000 and $71,000, marking the all-time peak. Some traders have faced challenges from past sell-offs in March and July, creating uncertainty around this threshold,” she explained.

Should Bitcoin price surpass $62,000, it would potentially liquidate a large volume of short positions amounting to approximately $845 million, as per CoinGlass data.

This analysis shares insights on market conditions and is intended for informational purposes only; it does not constitute financial advice. All investments carry risk, and individuals are advised to perform their due diligence.