Is Bitcoin's Breakout from a 2-Month Downtrend a Legitimate Bullish Signal?

Bitcoin's price action over the past two months has painted a complex narrative of volatility, institutional shifts, and macroeconomic headwinds. From an all-time high of $126,250 on October 6, 2025, Bitcoin plummeted to a low of $80,255 by November 21, erasing over $1 trillion in market capitalization according to analysis. This sharp correction, driven by shifting Federal Reserve policy expectations and global liquidity constraints as research shows, has left investors questioning whether the recent rebound above $90,000 signals a sustainable bullish trend or a temporary reprieve in a deeper bearish cycle.

Technical Analysis: RSI, MACD, and Key Resistance Levels

Bitcoin's technical indicators suggest a fragile balance between bearish momentum and potential oversold conditions. As of November 26, 2025, the RSI stands at 31.78, nearing oversold territory, while the MACD histogram at -216.66 indicates slowing bearish momentum. However, the price remains compressed within Bollinger Bands, with critical support at $86,000 and resistance at $90,000 according to data.

On the daily chart, Bitcoin closed below key moving averages (EMA9, EMA21) and the $88,402.92 level, with both MACD and RSI exhibiting bearish signals within a downward channel. A short-term strategy suggests selling rallies into the $88,402.92–$95,048.67 range, while a breakdown below $86,150.64 could target $79,505.67 according to chart analysis. Conversely, a bullish breakout above $90,000 would signal a retest of the 50% Fibonacci retracement of the $124,658 all-time high, with $95,000 as a potential near-term target according to technical indicators.

The 4-hour and 1-hour charts reveal mixed signals. While the 4-hour chart shows corrective momentum within a falling channel, the 1-hour chart hints at a small bullish trend above EMA9 and EMA21, with VWAP and MACD/KD signals suggesting short-term buying opportunities according to technical analysis.

Structural Factors: ETFs, Institutional Outflows, and Macroeconomic Shifts

Structurally, Bitcoin's price action has been shaped by institutional dynamics and macroeconomic forces. The approval of Bitcoin and altcoin ETFs in Q4 2025 initially drove inflows, with Bitcoin hitting $115,970 in September. However, this momentum reversed in November as spot ETFs recorded $3.79 billion in outflows, reflecting a deleveraging event amid rising yields and tightening liquidity according to market analysis.

The Federal Reserve's pivot to a "higher-for-longer" monetary stance has exacerbated pressure on speculative assets, which now exhibit a 30-day correlation of 0.84 with the S&P 500. Meanwhile, Japan's monetary policy shift-sparking surging 10-year yields-further strained global liquidity, as data shows compounding Bitcoin's downward trajectory.

Despite these headwinds, institutional demand for Bitcoin ETPs remains robust, with 68% of institutional investors already invested or planning to allocate capital. Regulatory clarity and improved custody solutions have bolstered confidence, though November's $3.45 billion in liquidations underscore the fragility of leveraged positions according to market reports.

Correlation with Traditional Assets: A Double-Edged Sword

Bitcoin's growing correlation with traditional risk assets, such as equities, highlights its integration into mainstream portfolios but also exposes it to systemic risks. The 0.84 correlation with the S&P 500 means Bitcoin is increasingly susceptible to macroeconomic shocks that ripple through global markets. While this alignment could attract institutional capital in a dovish policy environment, it also amplifies downside risks during equity sell-offs.

Is the Breakout Legitimate? A Balanced View

The recent rebound above $90,000 offers a glimmer of hope, but its legitimacy hinges on two critical factors:
1. Technical Validation: A sustained close above $99,005.46 on the daily chart would invalidate the short-term bearish thesis according to technical analysis. Conversely, a failure to hold $86,000 could trigger a test of $75,000 or even $57,700 according to market signals.
2. Structural Resilience: Institutional inflows and ETF approvals could offset macroeconomic headwinds if the Fed signals a pivot. However, the "higher-for-longer" narrative remains a dominant overhang.

While the RSI's proximity to oversold levels and the MACD's slowing bearish momentum suggest a potential rebound, structural factors-including ETF outflows and global liquidity constraints-cast doubt on the sustainability of a bullish breakout.

Conclusion

Bitcoin's breakout from a 2-month downtrend appears to be a partial reprieve rather than a definitive reversal. Technically, the asset is in a precarious position, with key resistance at $90,000 and support at $86,000 acting as pivotal levels. Structurally, the interplay between institutional demand and macroeconomic forces will dictate the next phase of Bitcoin's trajectory. Investors should remain cautious, treating any rally as a potential opportunity to reassess risk exposure rather than a green light for aggressive long positions.