Bitcoin (BTC) is retesting the resistance level as its price recovers the $71,000 mark. However, one analyst warned that the bear market is expected to continue and that the recent upswing may be short-lived.
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Bitcoin’s eyes are regaining former high resistance
On Tuesday, Bitcoin rallied 7.5% from Sunday’s lows to the $71,000 area, retesting that key level for the second time in a week before briefly retracing the $69,000 level.
The cryptocurrency has been trading between $63,000-$71,000 for the past month, briefly breaking above the upper boundary during the past week in the market. However, the price of BTC could not sustain its multiple attempts amid market volatility.
In Monday’s analysis, market watcher Rekt Capital observed that Bitcoin interacts with two key levels that constitute “important overhead resistance”: the all-time highs (ATHs) of $69,000 and $71,300 in 2021 and 2024, respectively.
As the analyst explained, these levels turned into resistance after the flagship cryptocurrency closed at $66,970 in February. Since then, BTC has repeatedly tested these key levels on a daily basis, but has failed to recover them.
Instead, it produced highs above $69,000 and $71,300, indicating that the previous ATHs will act as rejection levels in the shorter term and could become key resistance if it closes below them monthly.
“For Bitcoin to begin to reverse this structure, the price would need to break above $69,000 by the end of March to position itself as support for an all-time pullback in 2021,” the analyst said.
“Similarly, the 2024 all-time high of $71,300 is likely to require several monthly closes from the level to properly initiate the recovery process,” he said.
Will BTC payout be short term?
While the previous ATHs risk turning into resistance, Rekt Capital noted that Bitcoin is currently finding important support around the 50-month moving average (MA) around $64,000-$65,000.
Historically, the flagship crypto initially reacts above this level in bear markets, but eventually loses it as support. The recent breakout from the 50-month MA allows BTC to test the 2021 and 2024 ATHs as resistance “for now”.
However, when a breakdown occurs, the level usually turns to new resistance before continuing further down. Now, “Bitcoin is effectively sandwiched between two key reactive zones,” he said, which could lead to short-term relief before continuing the medium-term decline.
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The analyst also observed that BTC appears to be only halfway through a bear market, opening the door for further downside. In an X post, he noted that BTC’s shortest bear market lasted about 365 days, while it is currently just over 150 days into the current market.
Other analysts have suggested that the cryptocurrency could follow the bullish trend of 2022. At that time, the price dropped significantly from the peak of the period, consolidated for months, and then had a final bull trap before its second major correction wave to the bottom of the market.
As of this writing, Bitcoin is trading at $71,307, up 3% on the day.
Featured image from Unsplash.com, Chart from TradingView.com
