Bitcoin (BTC) Price Nears Confirmation of Bearish Head-and-Shoulders Chart Pattern as Shorts Dominate

Bitcoin’s (BTC) price has been in a slump since hitting $108,353 on Dec. 17, and its recent drop below $92,000 has put many analysts on alert due to the looming confirmation of a bearish head-and-shoulders chart pattern.

Bitcoin’s recent price slide has put many on edge, especially as the apex cryptocurrency appears to be setting up a bearish technical pattern on the daily chart.

After hitting a record high of $108,353 on Dec. 17, BTC’s price has slid by about 16%. The recent drop below $92,000 has put many technical analysts on alert due to the looming confirmation of a bearish head-and-shoulders chart pattern.

A few daily closes below the pattern’s neckline at $92,000 could be followed by a decline to the pattern’s target at $79,500.

Chartered market technician Aksel Kibar has also set a Bitcoin ( BTC ) price target at $80,000 if the head-and-shoulders pattern is confirmed. Kibar’s price target is based on the 1.61 Fib extension of the pattern, which adds up to a total potential decline of $92,715 from the pattern’s peak.

Bitcoin’s recent price slide has been largely supported by a few key levels, with each dip into the underlying bids being absorbed quickly. For instance, recent dips into $91,500 were met by dip-buying, as evident from the quick recovery.

However, each of these dip-buying instances is followed by selling upon BTC’s return to the intraday range high, suggesting that overhead resistances are also being defended by sellers.

Related: BTC price ‘breakdown confirmed?’ 5 Things to know in Bitcoin this week

As noted by popular crypto trader Skew, “Shorts are the dominant positioning here” and “further aggressive shorting would mean the market expects an immediate breakdown” from Bitcoin’s current range.

Highlighting the importance of the $94,000 level, Skew said:

“BTC/USD spot on Coinbase alongside spot and futures CVD.” Source: Trdr.io

Crucially, a series of four-hour closes above $94,000 during the trading day will be essential to protecting the current range.

Over the last week, spot selling has been the dominant action in the market, and a majority of the perpetual futures market is tilted toward margin shorts, so holding $94,000 as the lowest rung of the range ($94,000–$99,000) would be the first step toward invalidating the bearish head-and-shoulders pattern on the daily time frame.