Bitcoin sell off and bears profiting at $80,000

Market Overview: Bitcoin

Over the past Bitcoin reports, we have consistently highlighted and anticipated the likelihood of a breakout as price compression intensified and key trading setups were activated. The underlying market structure suggested that the price was coiling within a range, building pressure for an eventual expansion.

A major event to watch is The White House Crypto Summit 2025, scheduled for March 7, hosted by President Donald Trump. This summit, will convene key industry leaders, including CEOs, founders, and investors, alongside the President’s Working Group on Digital Assets. The summit is expected to emphasize U.S. leadership in digital finance, with discussions on regulatory clarity, stablecoin frameworks, and possibly a national crypto reserve. This marks a pivotal shift from enforcement-driven approaches toward innovation-friendly policies, setting the stage for increased institutional and retail engagement in the space.

While long-term policies will play a crucial role in shaping Bitcoin’s future, in the short term, speculative behavior may dominate market movements. The anticipation surrounding the summit might keep retail investors highly engaged, driving price fluctuations that are more emotionally driven rather than rationally structured. This could lead to an environment where the price struggles to establish a definitive trend unless immediate and clear positive policies emerge.

Market Analysis: Monthy, Weekly and Daily

At the close of the previous month, Bitcoin remained in a tight bull channel, a hallmark of strong trending conditions with minimal pullbacks. However, with the formation of a big bear bar in February, the integrity of this structure has been compromised. As a result, Bitcoin is no longer in a tight bull channel, and while a strong bull bar in March could maintain the potential for a bull channel, the more probable scenario is the beginning of a broader sideways pattern.

This tight bull channel was itself the result of a bull breakout from the 2022 all-time high (ATH), along with the breakout of the 2024 bull flag, which we have referred to as the 8-month 2024 trading range. This trading range acted as a key accumulation phase, supporting the subsequent breakout. However, since November 2024, we have repeatedly warned about the major resistance levels that Bitcoin was approaching:

• The psychological resistance at $100,000, a significant round number likely to trigger profit-taking.
• The measured move target from the 2024 bull flag (1:1 extension), placing Bitcoin at approximately $120,000.
• The upper boundary of the long-term bull channel, commonly referred to as a wedge top, marking the third touch of this resistance trendline—historically a point of exhaustion in bull markets.

February’s Bear Close

February’s candle closed as a strong bear bar, marking the first monthly close below a previous bar’s low since August 2023. However, context is key. In August 2023, Bitcoin was trading at deeply discounted prices—more than 50% below its all-time high. By contrast, the current market conditions may mirror those of May 2021, where a sharp bullish advance stalled above $50,000 following an aggressive price doubling. This historical parallel suggests that the recent bear development may signal an extended consolidation.

Potential Scenarios Moving Forward

1. Sideways Action with Compression, Leading to a Bull Trend
   • If the sideways action remains relatively tight without significant downside expansion, it could lead to a small pullback bull trend or a healthy bull channel.
   • A bullish breakout from this compression phase could reignite momentum and establish a sustainable uptrend.
2. Broad Trading Range with High Volatility
   • A more volatile outcome would see Bitcoin developing a broader trading range, closing the gap between its current lows and the 2024 bull flag breakout point.
   • In this case, strong up and down legs would persist for a while, with Bitcoin likely oscillating between $50,000 and $120,000.

Strategic Considerations

If the February pullback had not occurred, a bullish breakout trade would have been viable, even with resistance at $120,000. However, the depth of this retracement suggests that a more prudent approach is warranted.

• Gradual accumulation through, particularly during bearish retracements below $80,000.
• If Bitcoin transitions into sideways-to-up price action, waiting for a tight breakout compression on the weekly or daily charts before entering long positions would be a more optimal strategy.

Bitcoin decisively broke downward from a breakout mode pattern this week. As we noted in last week’s report, tight consolidations at key levels often precede strong directional movements.

Bitcoin tends to favor bull breakouts over bear ones. When price declines from a consolidation phase, it is typically due to profit-taking and hedging from bulls rather than a genuine increase in bearish momentum. Conversely, bullish breakouts tend to sustain their movement due to Bitcoin’s long-term adoption and growth narrative.

Key Support Levels in Play

• The 26-week moving average, representing six months of trading activity, serving as a dynamic support zone.
• The Weekly Breakout Point, which is the highest price recorded during 2024’s 8-month trading range.

Investment Strategy

• Active investors may prefer buying high after a bull breakout of a tight range, using defined risk management to exit in case of failure, below the tight range. This is my prefered strategy, as if the trade does not work, I can go and invest my money in something else. The bad side, is that half of the time, I will lose money.
• Passive investors prefer to focus on periodic accumulation, using a Dollar Cost Average approach.

The breakout mode (BOM) pattern identified on the IBIT ETF earlier this month reached its 2R profit target this week. Our February reports consistently highlighted trading opportunities, also a triangle breakout consolidations and breakout levels.

Current Trade Setups

• A final entry for bears exists on rallies toward the 21-day EMA, particularly if there is a strong rejection from this level.
• For bulls, buying on breakouts rather than reversals is the preferred strategy. A breakout mode pattern forming and a move above the moving average would be the signals to watch.

We encourage traders to share insights and discuss strategies in our comment section. If you found this report valuable, consider sharing it with fellow traders to help us all continue growing together!

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