Bitcoin is currently navigating a critical juncture, with analysts closely watching key support levels that could determine whether the cryptocurrency avoids a significant downturn to $88,000. The current price action has formed a classic bear flag pattern on the daily chart, a signal that has triggered concerns about a potential breakdown.
The bear flag pattern is a bearish continuation setup that emerges when the price consolidates upward within a parallel channel after a sharp downward move. In Bitcoin's case, this pattern began forming after it bottomed out around $103,530 on October 11. Over the past week, the price has repeatedly retested the flag's support line, which currently sits at $107,500.
A daily candlestick close below this $107,500 level would confirm the bear flag, potentially paving the way for a bearish continuation towards the pattern's target of $88,100. This move would represent a 19% decline. Technical indicators, such as the relative strength index (RSI), support this outlook, with the RSI currently at 42, suggesting that market conditions favor the downside.
Similar bearish patterns on the four-hour chart project a drop toward $98,000, a level that could also serve as a potential reversal point in the short term. Bitcoin has already fallen 13.6% from its all-time high of over $126,000. This decline has pushed Bitcoin below the short-term holders' cost basis of around $113,100, a situation that on-chain data provider Glassnode says has historically preceded a mid-term bearish phase as weaker investors begin to sell.
According to Glassnode's Bitcoin Supply Quantiles Cost Basis Model, bulls must maintain Bitcoin above the 0.85 quantile at $108,600 to prevent further sell-offs. Historically, failure to hold this threshold has indicated structural market weakness.
However, key BTC support levels at $108,250 (432K BTC bought), $104,250 (401K BTC bought), and $97,050 (404K BTC bought) suggest strong investor buying interest that could keep BTC price afloat and spark rebounds.
Conversely, if Bitcoin revisits the next resistance level of $116,963, profit-taking could trigger short-term pressure. Currently, Bitcoin is hovering around $84,680 after peaking at $86,100 in the past 24 hours. To aim for $107k-$110k, BTC must close the daily candle above $103,100. If BTC manages to close a 4-hour candle above $103k, it could quickly target the $104k-$105k range.
