Bitcoin's price action has recently caught the attention of analysts due to the emergence of a pattern with a claimed 78% accuracy in predicting new local highs. This pattern, identified as a bullish engulfing formation on the daily chart, has historically signaled a potential shift in market dynamics and has been observed to precede significant price increases.
The bullish engulfing pattern is characterized by a candlestick that fully encompasses the previous two candlesticks, indicating a strong reversal of a downtrend. To assess the reliability of this pattern, analysts have conducted comparative analyses of all bullish engulfing formations on Bitcoin's daily chart since 2021, using additional criteria to validate its strength. These criteria include ensuring that the engulfing candle encompasses at least the previous two candles, that the pattern emerges at the tail end of a corrective phase, and that a clear break of structure is observed in the sessions following the engulfing pattern to confirm bullish momentum.
Since January 2021, Bitcoin has recorded 19 instances of the bullish engulfing pattern meeting the defined confirmation criteria. Out of these, 15 led to the formation of new local highs in the following days or weeks, translating to a historical success rate of approximately 78%. Notably, all 19 instances occurred within a broader bull market context, suggesting that the pattern's reliability is enhanced during periods of sustained uptrends.
However, it's important to acknowledge that the efficacy of the bullish engulfing pattern is heavily dependent on the prevailing market trend. During bear markets, the pattern has been shown to be less reliable. In 2024 and 2025, there were only two failed signals, in May 2024 and March 2025, where the pattern did not lead to new price highs.
Despite these exceptions, the prevailing bull market structure suggests a statistically favorable environment for continuation. Bitcoin's liquidity metrics have reached levels unseen since late 2022, signaling robust market health and potential for sustained price appreciation. Bitcoin has absorbed over $544 billion in capital since November 2022, pushing the realized market cap to $944 billion.
Currently, Bitcoin is positioned to make new highs before potentially retesting the $100,000 level. Bitcoin price continues moving higher as traders anticipate a round of interest rate cuts from the US Federal Reserve. Bitcoin turned up sharply from $100,000 and rose above the moving averages, indicating solid buying at lower levels. Sellers are expected to defend the zone between the downtrend line and the all-time high of $111,980. If the price turns down from the overhead zone but finds support at the 20-day EMA, it signals that the bulls are buying on dips. The bulls will then again try to clear the overhead zone.
Adding to the bullish sentiment, Bitcoin is also approaching its all-time high at $112,000. Exchange flows are drying up cutting off supply. Bitcoin is sitting above $107,000 and looking strong. The momentum is clearly building, and BTC just reclaimed its 50-day EMA, a technical milestone that's often a springboard for breakout rallies.
While technical patterns and historical data can provide valuable insights, it's important to consider other factors that could influence Bitcoin's price, such as market sentiment, regulatory developments, and macroeconomic conditions. Bitcoin looks set to challenge the all-time high at $111,980, but the cryptocurrency markets may require a catalyst to hold on to the higher levels.
