- Bitcoin price has formed a double-top pattern on the daily chart.
- It has also formed a bearish pennant pattern after last week’s crash.
- A bearish breakout willl spell doom for altcoins like HBAR and Stellar.
Bitcoin price has remained in a tight range in the past few days as investors reflected on last week’s crash. It was hovering at $26,000, where it has been in the past few days. This price is much lower than the year-to-date high and is close to its lowest level since June this year.
Bitcoin forms bearish patterns
I accurately predicted last week’s Bitcoin price crash in this article. In it, I noted that BTC had formed a double-top pattern at the YTD high at $31,850. In price action analysis, this pattern is usually one of the most accurate bearish signs in the industry. The neckline of this pattern was at $24,740.
Now, Bitcoin price has formed another extremely bearish pattern. It has formed a bearish pennant pattern on the daily chart. This pattern is characterized by a vertical line and a small triangle pattern, as should below in black.
Worse, Bitcoin has moved below the 100-day and 200-day exponential moving averages (EMA), signaling that bears are in control. Bitcoin is also hovering at the 38.2% Fibonacci Retracement level.
Therefore, there is a likelihood that the BTC price will have a bearish breakout as sellers target the 50% retracement level at $23,612, the 50% Fibonacci Retracement level. This price is about 10% below the current level.
More trouble for altcoins
If my prediction is accurate, it means that other cryptocurrencies will be in trouble in the coming days. This happens because altcoins like Cardano, Avalanche, and Polygon have a close correlation with Bitcoin.
Some of the most vulnerable coins are those with some bearish catalysts in the coming weeks. Avalanche is one of them because of the upcoming token unlock that will release tokens worth over $100 million.
Other cryptocurrencies with token unlocks in the coming days are Hedera Hashgraph (HBAR), dYdX, Nym, and Lido (LDO). Token unlocks are seen as bearish catalysts because they lead to dilution of existing investors.
The other cryptocurrency to watch is Stellar Lumens after Coinbase invested in Circle, the creator of USD Coin (USDC). USDC uses Stellar’s technology.
Therefore, there is a likelihood that altcoins like dYdX, HBAR, Algorand, and Injective Protocol’s token will have a bearish breakout if Bitcoin makes a bearish breakout.
