Key Takeaways:
- Bitcoin (BTC) dropped from $124K ATH to $115K amid weak macro sentiment and liquidations.
- Trader Mayne warns of a bearish Swing Failure Pattern (SFP) on BTC’s weekly chart.
- Historically, SFP signals have preceded major declines in 13 of 15 past cases.
Major cryptocurrencies have taken a major dip, with Bitcoin (BTC), Ethereum (ETH) and XRP declining by over 2%, 5% and 4% respectively on Monday at the time of writing. The cryptocurrency market capitalization decreased from $4.03 trillion to $3.88 trillion, decreasing by 3.72%. BTC fell from its all-time high (ATH) levels of $124K to currently trading around $115K. The recent price correction could be primarily due to the drop in interest rate expectations after higher-than-expected Producer Price Index (PPI) data was reported, followed by large-scale liquidations and potential profit-taking after reaching ATH levels.
A famous trader and CEO of a prop firm going by the name of Tradermayne (Mayne) on X, with over 538K followers, shared his analysis on why he expects a further bearish outlook on BTC based on the weekly chart.
BTC touched a new ATH above $124K in the last week. According to trader Mayne, he believes the reason behind the bearish momentum is possibly due to the formation of a bearish Swing Failure Pattern (SFP) based on BTC’s weekly chart.
According to the trader, the same signal has shown up 15 times over the past 5 years, and in 13 of those cases, BTC saw a significant price drop shortly after.
An SFP emerges when a fake breakout occurs, just in the case of BTC, when it reached an ATH above $124K before falling to levels of $117K at the time Mayne had tweeted about the bearish outlook being formed.
At the time of reporting, BTC trades below the level of $117K. A failed breakout occurred when BTC crossed its ATH levels, trapping bullish traders into thinking a big rally would begin. However, BTC reversed from the highs and declined further.
Traders use SFPs to indicate that the market is rejecting higher prices and may be likely to reverse course. It’s a regular and effective pattern that is based on understanding how traders become trapped at key levels.
