BTC Dips Below $78K to Two-Week Low as Analysts Identify Potential 'Bear Trap' Formation
Bitcoin dropped beneath the $78,000 threshold for the first time since early May, yet market participants maintain optimism regarding a potential BTC price recovery in the near term.
Bitcoin (BTC) hovered around the $78,000 mark on Saturday following geopolitical tensions that wiped out the majority of its gains accumulated throughout May.
Key points:
- Bitcoin drops beneath $78,000 for the first time since early May.
- Concerns over oil supply merge with prevailing anxiety surrounding US bond markets, creating additional pressure on risk assets.
- Weak support levels have market participants eyeing $75,000 and below as potential targets, though some optimistic traders identify signs of a "bear trap" developing.
Various challenges "coming together" for cryptocurrency and risk assets
Information from TradingView verified fresh daily lows reaching $77,614 — marking the weakest price levels witnessed since May 1.
Bearish momentum originating from worries regarding US government bonds persisted, with the US-Iran conflict also occupying a prominent position in traders' considerations.
Iran seemed to be moving forward with implementing a toll collection mechanism for passage through the Strait of Hormuz — the focal point of a worldwide oil-supply constriction — while simultaneously excluding US traffic.
According to reports from trading resource The Kobeissi Letter and other sources, Hormuz would purportedly "remain closed to the operators of Project Freedom."
On Friday, commentary from Mosaic Asset Company outlined the challenges presented by the current geopolitical and macroeconomic environment for risk assets.
"The prospect for another inflation wave is lining up with similarities to the surge in price levels into mid-2022," it wrote in its latest Mosaic Chart Alerts blog post.
"Disrupted supply chains from last year's trade war, impact of war on energy markets, and stimulus via large federal budget deficits are coming together at the same time."
WTI crude oil concluded the trading week with prices exceeding $100 per barrel.
Bitcoin price movement suggests potential "bear trap" scenario
Within the Bitcoin trading community, sentiment remained divided regarding the strength of bearish forces beneath the $80,000 threshold.
"Over the last couple of days, the price has been going down slightly, while the open interest has climbed up. But things become interesting if we correlate this with Funding Rates, which have flipped negative," X trading account Cryptic Trades wrote on X.
"This shows us that bears are DOUBLING DOWN right now and betting on a breakdown. It also shows that even though the market structure remains intact, bears are shorting as if a breakdown already happened. That's generally how bear-traps are formed."
According to analyst Eric Coleman, a potential target for fresh local lows sits in the vicinity of $75,000.
"BTC went down after the breakdown retest of the ascending triangle," he summarized alongside a chart showing relevant support/resistance flip levels.
In his analysis of exchange order-book liquidity, Daan Crypto Trades pointed to $71,000 as the closest significant zone of interest situated below current price levels.
"The longer price compresses around this $80K region, the more liquidity will be building up on both sides which should result in a larger more aggressive move at some point," he told X followers.
