Bitcoin

Short-Term Bearish Outlook and Analysis Based on Chart Patterns

I’ve been bearish on Bitcoin (BTC) and remain so in the short term, despite recent rallies. The charts illustrate a series of corrective patterns across BTC, the S&P 500 Index (SPX), and the Nasdaq 100 Index (NDQ), all indicating potential reversals. Here’s a breakdown of my analysis:

Bitcoin (BTC/USD) Analysis

Chart Observations:

• The BTC chart shows a three-part, non-impulsive structure from the August low, taking BTC slightly above its all-time high. This movement, marked as a WXY pattern, lacks the characteristics of a true impulsive wave, suggesting it’s part of a larger corrective structure rather than a continuation of a strong uptrend.
• I’ve labeled the recent rally as an “X-Wave,” which resembles a broad B-wave overshoot. This pattern often serves to clear out short positions before another downward move. BTC’s movement here seems to align with this theory, as the “overshoot” has likely triggered short liquidations and set up the market for a potential correction.

Key Fibonacci Levels and Potential Pullback Targets:

• In the BTC chart, I’ve marked Fibonacci retracement levels where Wave 4 or Wave A could potentially find support. The 0.382, 0.5, and 0.618 retracement levels around $65k, $63k, and lower could serve as critical support zones in the next pullback. If BTC crosses the local high of Wave 3, it could initiate a new five-wave impulsive pattern (beginning Wave 1 of Wave 5).
• Until then, the current three-part structure indicates a non-impulsive rally, with the next pullback being crucial. I’ve drawn a possible course on the chart, projecting a corrective ABC move that could align with the Fibonacci levels.

On-Chain Data and Liquidity Clusters:

• The chart suggests major liquidity clusters at $72k, $61k, and $58k. These clusters often serve as potential reversal points, as they represent regions where liquidations might occur. Furthermore, on-chain metrics reveal an unusually high open interest relative to spot buys, coupled with rising funding rates. This combination typically signals elevated leverage and could foreshadow a deeper correction as positions unwind.

Broader Market Context: SPX and NDQ Analysis

Both the SPX and NDQ charts exhibit similar corrective structures, supporting a short-term bearish outlook across broader markets.

• S&P 500 Index (SPX):

• The SPX chart highlights a non-impulsive, three-wave pattern labeled as a B-wave, likely indicating a temporary top. In the chart, a potential correction zone is marked, with Fibonacci levels showing possible pullback targets around the 0.382 and 0.5 retracement levels (near 5,100 and 4,922). The structure suggests that SPX could soon undergo a corrective move, potentially aligning with BTC’s projected pullback.
• Nasdaq 100 Index (NDQ):

• The NDQ chart similarly shows a B-wave with a clear, three-part structure. This likely indicates a corrective movement ahead, with potential targets in the region around 18,256 (0.236 Fibonacci retracement) and deeper levels around 16,810 (0.382 retracement). These levels represent support zones where a correction could settle before resuming an uptrend.

Altcoin Market Sentiment and Broader Implications

The broader crypto market remains bullish on higher timeframes, yet many altcoins are now nearing high-timeframe resistance. This aligns with potential pullbacks in BTC, SPX, and NDQ, reinforcing the likelihood of a correction across markets.

Summary and Outlook

• BTC: Currently, the BTC chart points to a WXY corrective structure, with Fibonacci levels serving as potential support zones in a pullback. I anticipate an ABC correction that could align with liquidity clusters around $72k, $61k, and $58k.
• SPX and NDQ: Both indices show three-part, non-impulsive B-waves, indicating a probable correction that aligns with BTC’s outlook.
• Market Indicators: Elevated open interest, rising funding rates, and significant liquidity clusters suggest heightened risk for a pullback, especially if the leveraged positions in BTC begin to unwind.

Overall, while the higher timeframes maintain a bullish bias, the upcoming pullback will be decisive. The next move in BTC and broader markets will clarify whether we’re entering a deeper correction or merely consolidating before another rally. I’m closely watching these levels and patterns for confirmation of a bearish continuation in the short term.