Bitcoin (BTC) is retesting resistance levels as its price recovers the $71,000 mark. However, an analyst has warned that the bear market is expected to continue and that the latest bounce could be short-lived.
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Bitcoin Eyes Reclaim Of Former All-Time High Resistance
On Tuesday, Bitcoin surged 7.5% from the Sunday lows toward the $71,000 area, retesting this key level for the second time in a week before momentarily retracing toward the $69,000 level.
The cryptocurrency has been trading between the $63,000-$71,000 price range over the past month, briefly surging above the upper boundary during last week’s market bounce. However, BTC’s price has failed to hold its multiple breakout attempts amid the market volatility.
In a Monday analysis, market watcher Rekt Capital observed that Bitcoin is interacting with two key levels that form “an important overhead resistance”: the 2021 and 2024 all-time highs (ATHs) at $69,000 and $71,300, respectively.
As the analyst explained, these levels turned into resistance in the monthly timeframe after the flagship cryptocurrency closed February at $66,970. Since then, BTC has repeatedly tested these key levels from below in the daily timeframe but has failed to reclaim them.
Instead, it has produced upside wicks above $69,000 and $71,300, signaling that the former ATHs are acting as rejection levels in shorter timeframes and could become key resistance if it monthly closes below them.
“For Bitcoin to begin shifting this structure, price would need to Monthly Close above $69,000 by the end of March to position itself for a reclaim of the 2021 All Time High as support,” the analyst asserted.
“Similarly, the 2024 All Time High at $71,300 would likely require multiple Monthly Closes above the level in order to properly establish a reclaim process,” he added.
BTC Bounce To Be Short-Lived?
While the former ATHs risk turning into resistance, Rekt Capital noted that Bitcoin is currently finding crucial support at the 50-month Moving Average (MA), around the $64,000-$65,000 area.
Historically, the flagship crypto has initially reacted from this level in bear markets, but eventually loses it as support. The recent bounce from the 50-month MA is enabling BTC to test the 2021 and 2024 ATHs as resistance “for the time being.”
However, once the breakdown occurs, the level usually becomes a new resistance before further downside continuation follows. Now, “Bitcoin is effectively sandwiched between two key reactive zones,” he affirmed, which could lead to short-term relief before the mid-term downside continues.
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The analyst also observed that BTC appears to be only halfway through the bear market, leaving the door open for further downside. In an X post, he noted that BTC’s shortest bear market lasted around 365 days, while it is currently just over 150 days into the current one.
Other analysts have suggested that the cryptocurrency could follow the 2022 cycle playbook. At the time, the price significantly retraced from the cycle peak, consolidated for months, and then had a final bull trap before its second major correction wave toward the market bottom.
As of this writing, Bitcoin trades at $71,307, a 3% increase in the daily timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
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