Bitcoin has disappointed traders once again, as many continue to expect the leading cryptocurrency to rise. Last week, the market experienced another sharp decline, even though Bitcoin had shown a strong recovery immediately after the US Congressional elections. This rally led many traders to believe that the decline was over, but the downward movement subsequently resumed. At present, the movement is still considered corrective. However, Bitcoin is continuing to move lower with increasing consistency, despite regular rebounds.

It is worth noting that there is still a possibility that the downward trend has ended. However, the reasons supporting the start of a new bullish trend remain uncertain and debatable. Bitcoin's latest three-month rally was essentially a movement from the lower boundary of the sideways channel to its upper boundary on the daily timeframe. This occurred after a deviation below the channel's lower boundary and was followed by a deviation above its upper boundary. The deviation above the upper boundary was substantial, but if it was indeed a deviation, Bitcoin may now be heading toward the $70,800 level. Bitcoin has returned to the sideways channel, making a move toward its 50% level a logical and technically justified scenario.

Meanwhile, most experts, who have consistently forecast further growth, have begun offering explanations for developments in the cryptocurrency market. A new trading week has begun, and Bitcoin has once again moved lower. However, traders are more interested in the question of "where will the price move next?" than in "why did a particular movement occur?" Following the Democrats' victory in the Congressional elections, Bitcoin's outlook deteriorated significantly. The Democrats support reducing government spending and lowering the national debt. In other words, they advocate living within the country's means, which is fundamentally different from Donald Trump's approach, which prioritizes economic growth by virtually any means necessary.

As a result, support for the AI sector and measures to stimulate the cryptocurrency market in the United States could be put on hold, while economic growth could slow. Consequently, the US stock market experienced a sharp decline, followed by Bitcoin. However, it is worth noting that the less favorable outlook for risk assets under Democratic leadership is far from the only reason for Bitcoin's decline. Many central banks around the world are tightening monetary policy, spot demand remains weak, capital continues to flow out of spot ETFs, and even Donald Trump has started selling his own coins amid concerns about an investigation into his cryptocurrency business.

Overall BTC/USD Outlook on the 1-Day Chart

On the daily timeframe, the bearish trend structure has been broken, so Bitcoin may have officially entered a new bullish trend. However, the price reacted to a bearish FVG from the previous trend, triggering a response to this pattern and initiating a correction. The move beyond the 60,000–82,500 sideways channels in September may have been a deviation. Combined with the reaction to two bearish FVGs, this could trigger a decline toward the channel's lower boundary.

This week, Bitcoin also corrected toward the nearest bearish FVG and showed a clear reaction, generating a new sell signal. Therefore, the bearish trend and sideways movement are still not considered complete.

Overall BTC/USD Outlook on the 4-Hour Chart

The bearish trend structure continues to develop on the 4-hour timeframe. The CHOCH line is currently located at 81,200. All the necessary signals for a downward reversal have appeared on the daily timeframe, allowing traders to open short positions. Bitcoin's potential targets are currently best determined using the sideways channel on the daily chart, which remains relevant in our assessment.

The trend structure is bearish on the 4-hour timeframe, while Bitcoin has reacted to another bearish pattern on the daily timeframe. The next decline followed shortly afterward. Another bearish FVG subsequently formed, but the price has not yet managed to correct toward it. A reaction to this zone could trigger another decline.

BTC/USD Trading Recommendations

Bitcoin attempted to establish a new upward trend, but the fundamental background, spot demand, and latest news remain too negative to support expectations of further growth. In the near future, Bitcoin may continue declining on the daily timeframe, as the price has already reacted to three bearish FVGs and formed a bearish Order Block.

A move beyond the boundaries of the sideways channel on the daily chart is interpreted as a deviation. Thus, Bitcoin has generated a reversal signal and is heading toward the $70,800 level. The bearish trend is not considered complete. In the near term, short positions remain more relevant than long positions.

Among the current patterns, particular attention should be paid to the bearish FVG on the daily chart, near which a sell signal was generated. A new bearish FVG has also formed on the 4-hour timeframe. A reaction to this zone could provide traders with an opportunity to open additional short positions.

Explanations for the Illustrations:

CHOCH – Change of Character; a break in the existing trend structure.

Liquidity – Liquidity, including Stop Loss orders and pending orders that market makers use to accumulate positions.

FVG – Fair Value Gap, an area of price inefficiency. Price moves through these areas very quickly, indicating a significant imbalance between buyers and sellers. Subsequently, price tends to return to these areas and react to them in the direction of the prevailing trend.

IFVG – Inverse Fair Value Gap. When price returns to such an area, it does not react to it but instead breaks through it with strong momentum and subsequently retests it from the opposite side.

OB – Order Block. A candle associated with a market maker's position entry, intended to capture liquidity and establish a position in the opposite direction.