Market Video Report: Bitcoin
Duration 19:19 mins.
Summary
Bitcoin long-term price action is following a 50% drawdown. Despite a strong April close, a “Surprise Event” near all-time highs has left “Trapped Bulls”, and hence, Resistance. While daily charts suggest a short-term rally, higher time frames suggests a prolonged trading range.
Transcript
Welcome back to the channel. This is the monthly chart of Bitcoin, and today we’re going to perform a deep dive into the current price action using the principles we teach here at the Al Brooks school.
As you can see on the chart, April has closed as the first Bull Bar of the year that has managed to close above its midpoint. In fact, this is the first bull bar to show this kind of strength since September 2025. For the past several months, Bitcoin has been notably weak, and the market structure effectively shifted to “Always In Short.” However, before we jump into what this April candle means for the coming months, we must establish the context. As Price Action traders, we know that context is everything. Without a clear understanding of where we are coming from, individual candles can be misleading and lead to poor trade entries. So, let’s go back and look at the broader story of the last few years to understand the forces currently at play.
The Bull Trend and the $100,000 Magnet
From January 2023 until October of last year, Bitcoin was in a textbook, very strong bull trend. Shortly after the SEC’s ETF approval, price momentum accelerated, eventually breaking above the previous all-time highs established back in November 2021.
Whenever a market breaks into new territory like that, we look for Measured Move targets. In this case, the market completed a measured move up based on the height of the massive 2021 to 2022 drawdown. This move brought us directly toward the $100,000 mark.
As we mentioned in our previous reports, we expected Bitcoin to start a pullback or gravitate around $100,000 for a long period. Why? Because $100,000 is a major “round number.” Institutions see these levels as psychological magnets where significant participation occur. It wasn’t a matter of “guessing” the top; it was an expectation based on how institutions and global market participants behave at major psychological milestones. Price Action traders pay very close attention to these levels because they often define the boundaries of a new trading range.
The Surprise Event: When Bull Flags Fail
If we analyze the bull trend from the 2023 lows to the 2025 highs, we can identify three distinct Bull Flags. The first formed in 2024, the second in early 2025, and the third in late 2025.
In a strong bull trend, we expect bull flags to lead to higher prices. Statistically, a bull flag has about a 60% chance of a bull breakout and only a 20% chance of a successful bear breakout (80% chance a bear breakout will fail). However, during the final quarter of 2025, something unexpected happened: we saw a Bear Breakout of a Bull Flag.
This is what we call a “Surprise Event.” It shifts the market sentiment immediately. I have marked this “Gray Zone” on the chart, which is a micro-gap between the low of October 2025 and the high of January 2026. This area is a significant “gap” or an area of price inefficiency.
Why is this zone so critical? Because above this gap, there are thousands of “Trapped Bulls”—traders who bought the highs expecting the bull trend to continue. These traders are now underwater. When the price rallies back into this Gray Zone, these trapped bulls will look to sell their positions just to get out at break-even. This creates a wall of overhead supply, making it very difficult for the market to break out to the upside on the first attempt. Even if the bulls are ultimately right about the long-term direction, their need to exit will cause bearish pressure in the short term.
Investor’s Math and the 50% Drawdown
The current drawdown has been approximately 50%. While crypto traders are used to volatility, we have to look at the “Investor’s Math.” In the stock market, a 20% drop is considered a bear market, but a 50% drop is a different beast entirely. To recover from a 50% loss, an asset must perform 100% just to reach the previous peak.
This math puts investors in a psychological bind. Because the drawdown was so deep, it creates layers of selling pressure all the way up. Traders who bought near the top are looking for any exit they can get. It doesn’t mean Bitcoin can’t recover, but the technicals show us that the asset faces a major challenge to recover quickly.
The most likely outcome after such a significant move is a long-lasting Trading Range. If Bitcoin can find value and stabilize between the current $65,000 low and the $100,000 level, that would actually be a bullish development in the long run. It would mean this new equilibrium is established above the 2021–2022 trading range, which is fundamentally constructive for the asset’s price discovery.
The Young Asset Class and Volatility
We must remember that Bitcoin is still a very young asset class. High uncertainty regarding its long-term value leads to high volatility. This is a basic rule of finance: the more certainty there is around an asset’s valuation, the lower the volatility. Because Bitcoin is still in its “discovery phase,” these 50% swings are part of its nature. Historically, we’ve seen Bitcoin survive multiple 80% drawdowns, so a 50% correction followed by a recovery is actually seen as “healthy” or “normal” by historical standards.
Daily Chart: The “Brave Buy” Setup
Now, let’s shift our focus to the Daily Chart. While we usually stick to higher timeframes in these monthly reports, the daily action right now is too interesting to ignore.
For the past couple of months, we’ve been tracking a trading range. In April, the price finally broke above that range and has since been trading sideways above the breakout point. This is very constructive for the bulls. It shows that market participants are accepting higher prices—there is no immediate, sharp rejection at the top of the range. Instead, bulls are “Buying High,” which is a sign of extreme strength.
In a vacuum, this setup is what some call a “Brave Buy.” You buy the top of the range or the breakout of this small bull flag, targeting the $90,000 level. It is a trade that is easy to structure with a clear stop and a high-probability target at the apex of the upper trading range. However, we cannot ignore the “Gray Zone” and the blue breakout line just above us. These are major resistance levels that were previously controlled absolutely by the bears.
Final Strategy: Probability vs. Certainty
This creates a conflict between the bullish daily setup and the bearish monthly resistance. When I see a conflict like this, I always defer to the higher timeframe. The weekly and monthly charts suggest that while $90,000 is a powerful magnet, the path there is fraught with “Trapped Bulls” and selling pressure.
Right now, we are in a 60/40 scenario. The outcome isn’t guaranteed. My recommendation is to avoid trying to “predict” the exact breakout. Instead:
- Wait for strength: Look for the price to move well above the Gray Zone and stabilize there before committing to a larger long position.
- Watch for a breakdown: If we break below the current April low or the $75,000 level, we should expect a second leg down toward the $50,000 area, which is the apex of the previous 2024 bull flag.
Trading is a game of probabilities, not certainties. If you follow a disciplined approach, manage your risk, and do things that make sense mathematically over time, you will succeed.
Thank you so much for watching this deep dive. If you found this analysis helpful, please leave a comment below, like the video, and join our community on Discord for more real-time Price Action updates. I’ll see you all next week!
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