The Great Test of Bitcoin: Technical Analysis of the Drop from the $126K High to Correction Risks

Bitcoin is facing a major showdown in the market. Based on historical price fluctuations, these cycles often provide profound insights. Currently, at $67.81K, the price has significantly retraced from the peak of $126.08K, and technical indicators are brewing a major change.

The Great Cycle of Historical Patterns: When Will the Ascending Wedge Break?

Chart analysis shows that Bitcoin has formed a clear ascending wedge pattern, a classic reversal signal in technical analysis. Historical data proves that whenever prices reach such highs, subsequent corrections tend to be quite severe.

Looking at the cycles of 2018 and 2022, Bitcoin experienced declines of over 75% after reaching peaks. Following this pattern, the market may face risks of correction down to around $30,000 or even lower. This is not alarmism but a rational analysis based on historical regularities.

The Heavy Shadow of -75% Correction: Technical Signals and Market Expectations

Current technical indicators present complex signals. The golden cross appeared at $86,834, which should suggest bullish expectations, but recent candlestick trends show signs of strong selling, serving as a warning of a “bear trap.”

In this context, market participants face choices. Some investors believe the correction is only a short-term adjustment, aiming for a higher peak of $150,000. Others are cautiously watching every candlestick, preparing for a possible deep correction.

Institutional Selling vs Retail Bottom-Fishing: Market Divergence of Risks and Opportunities

There is a clear divergence in market expectations. Whale-level institutional funds are showing signs of reducing positions at these high levels, gradually selling based on ample information advantages. Meanwhile, retail investors continue buying based on optimistic outlooks, highlighting information asymmetry in the market.

Great cycles are often accompanied by significant divergence. When institutions are selling in reality while retail investors are buying in hope, historical experience teaches us to be especially cautious. In the crypto market, holding cash reserves has proven to be a wise choice to weather uncertain times.

Viewing Market Outlook from Multiple Perspectives

The market faces two main expectations: one is a sharp correction down to $30,000; the other is that this is just a correction, with the target still aiming for $150,000. The opposition of these views reflects the complexity of technical signals. Regardless of which direction the market ultimately chooses, cautiousness and risk management are especially important.

Bitcoin’s great story is far from over; the next chapter is gradually unfolding through the choices of market participants.