Bitcoin Price Prediction: Confirmed Bear Flag Could Lead to 18% Drop

Bitcoin (BTC) has jumped by 2.7% in the past 24 hours, reaching $94,000 as positive momentum has accelerated since the year started.

Trading volumes have surged by 55% to $42 billion, indicating that buying pressure is quite strong.

In the past 7 days alone, the token has booked a 6.2% increase, and a handful of technical indicators are flashing extremely bullish signals.

Bitcoin’s funding rate has hit its highest level since October 5, back when the token reached its latest all-time high. Data from CoinGlass shows that, on January 1, the OI-weighted funding rate hit 0.011%.

A strong spike in BTC’s funding rate indicates that speculators have jumped back into the market and seem to believe that this could be the beginning of the top crypto’s next leg up.

The last time this metric reached this mark during a bearish cycle was in September this year. Back then, the price of BTC recovered by 10%, moving from $108,000 to $117,000 in just a few weeks.

Key Macro Catalysts to Watch This Week

Despite the latest uptrend, Bitcoin’s open interest (OI) is still on a downtrend. Data from CoinGlass shows that traders’ exposure to the token in the futures market has dropped from 752,000 BTC in mid-November to 663,000 BTC at the time of writing.

However, market sentiment is improving. The Fear and Greed Index has bounced back from a record low of 11 a few weeks ago to 42 at the time of writing. This means that investors’ attitude has shifted from Extreme Panic to Neutral following BTC’s latest consolidation.

On Friday, the market will scrutinize the most up-to-date jobs data as non-farm payrolls for December have finally caught up after the longest U.S. government shutdown in history.

The market expects that 57,000 new jobs were created during this period. Any pleasant (or unpleasant) surprises on this front could either put an end to or further fuel BTC’s rally.

Meanwhile, the market will also keep an eye on how ETF inflows evolve to gauge market sentiment. Last Friday, nearly $417 million flowed to BTC ETFs in a single day, according to data from Farside Investors. This was the largest inflow that these vehicles had received since December 17.

Bitcoin Could Drop to $76K If This Bearish Pattern is Confirmed

From a technical standpoint, the daily chart shows that a bearish flag pattern has formed, increasing BTC’s downside risk despite the latest uptick.

BTC/USD Daily Chart (Binance) – Source: TradingView

The key resistance to watch at this point is $94,000, as the price has rejected a move above this level multiple times in the past few weeks.

If we get another rejection and the price heads downwards again, this bear flag will continue to be in play. In that case, BTC’s downside risk would be quite high at around 18%, as the token could drop to $76,000.

Bear flags are continuation patterns. Since the token’s dominant trend is bearish, this is a high-probability setup that may only be invalidated if BTC climbs to at least $96,000 in the next few days.

The Relative Strength Index (RSI) supports a bullish outlook for the time being, as the oscillator has jumped above the 14-day moving average. This is an early buy signal that would be fully confirmed if the price rises above the 200-day exponential moving average (EMA).