A hawkish Fed. Rising bond yields. Concerns about Strategy (MSTR). Bitcoin $BTC$64,085.65 already has plenty working against it. Now an ominous chart pattern is adding to the uncertainty.
The pattern is called a bear flag, and a breakdown could send the price of the largest cryptocurrency to as low as $54,000 initially, according to pseudonymous trader Doctor Profit, who called $BTC’s bull-market peak at $126,000 and the subsequent selloff.
“Bitcoin is now forming a massive bearish flag on the daily timeframe,” the trader wrote on X. “My target is a dump to 54-56k region first before we move sideways once again and afterwards another leg down and the bottom is close in the region between 40-50k in my opinion.”
Drawn on a chart, the pattern looks like a flag on a pole that’s been flipped upside down. Here’s how it works: An asset drops sharply and then sees a relief bounce. The slide represents the pole and the bounce becomes the flag. When the price drops below the lower end of the flag, it deepens the selloff, with the downward move roughly the same size as the initial decline.
Doctor Profit’s chart identifies bitcoin’s selloff from the May high of $82,000 to under $60,000 by June 5 as the pole and the recent bounce to $68,000 as the flag.
It’s worth keeping in mind that chart patterns aren’t science. Two analysts can look at the same graph and draw the flag differently. Bear flags break down, but they also fail, and price can just as easily turn higher.
That said, recent options market flows are consistent with Doctor Profit’s conclusion. Last week, traders bought put options, signaling expectations of a near-term price slide to $52,000.
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