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▲ Bitcoin (BTC), decline, bear market/AI-generated image
An analysis has emerged that a bearish candle structure, which previously appeared before sharp declines on Bitcoin (Bitcoin, BTC) weekly charts, has been confirmed again. As the recent weekly candle erased the previous upward trend and closed below the previous week's low, market caution regarding further downside potential is increasing.
NewsBTC reported on May 21 (local time) that a cryptocurrency analyst operating under the name Sherlock on X (formerly Twitter) analyzed Bitcoin's weekly candle structure and found that a rare bearish signal, confirmed a total of 33 times on Binance since 2017, has reappeared. Sherlock presented the key reasons: this candle was not just a simple bearish candle but appeared after a preceding bullish candle, its body engulfed the previous bullish candle, and it closed below the previous week's low.
According to the article, Bitcoin started the week at $82,210, and although buying pressure attempted to push it higher, it failed, and by the weekly close, it had fallen to $77,457. The preceding bullish candle had created expectations that support above $80,000 would hold, but the subsequent weekly candle erased those gains and closed below the previous low, turning the prior rebound into a bull trap.
Sherlock's compilation shows that the same structure appeared 33 times on Binance since 2017. In the subsequent 12 weeks, Bitcoin fell by at least 3% in 31 instances, at least 5% in 28 instances, at least 8% in 25 instances, and at least 10% in 23 instances.
The magnitude of the decline was also significant. After this weekly structure appeared, Bitcoin's average decline was 20.9%, and the median decline was 15.8%. Based on Bitcoin's closing price of $77,457 last week, if a median-level decline were to recur, the price could fall to $65,000, and if the average decline were applied, it could drop to around $61,000.
At the time of writing, Bitcoin was trading at $77,800, and bulls were attempting to defend the $77,000 level. The current weekly candle is developing as a bullish one, but with time remaining until the weekly close, there is still a possibility for the trend to change. NewsBTC reported that Bitcoin is under pressure from ETF outflows, and according to SoSoValue data, outflows have continued for four consecutive trading days.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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