Bitcoin Price Action Echoes 2021 Cycle Top Setup: Analysts Warn of Repeat Bear Market

Bitcoin's current price action resembles the setup before the 2021 crash into a long bear market. Analysts warn of a repeat of the 2021 breakdown if the 50-day support fails. The 200-day SMA provides a safety net for the broader trend. The relative strength index shows BTC edging close to oversold conditions. The next move for BTC depends on how it reacts in the coming weeks as macroeconomic pressures, Federal Reserve policy, and ETF flows intersect with the fragile technical picture.

Bitcoin (BTC) has been experiencing a notable dip below the $110,000 mark, reminiscent of the conditions preceding the 2021 crash into a prolonged bear market. Analysts are closely monitoring the current price action, with the 50-day support level being a critical point of interest. If this support fails, it could signal a repeat of the 2021 breakdown [1].

The 200-day simple moving average (SMA) is acting as a safety net for the broader trend, providing a potential floor for Bitcoin's price. Meanwhile, the relative strength index (RSI) is edging close to oversold conditions, indicating a possible temporary shakeout before a potential upward move [1].

Several factors are influencing Bitcoin's recent price action. Whale activity, including large transfers to market-makers, has been notable in pushing prices temporarily below $109,500. Additionally, Bitcoin ETFs continue to attract institutional capital, with net inflows into U.S. spot BTC ETFs reaching $178.9 million on August 28 alone [1].

Macroeconomic pressures and Federal Reserve policy also play significant roles. The Federal Reserve is expected to pause interest rate cuts after December to assess the impact of Trump's policies on the economy [3]. This pause could influence Bitcoin's price dynamics, especially as investors consider Bitcoin as an inflation hedge.

The upcoming Bitcoin halving in 2025 is another potential catalyst for price acceleration, as historically halving events have reduced BTC supply growth, which can create bullish momentum as demand increases [1].

In summary, while short-term corrections are underway, Bitcoin's long-term outlook remains bullish, supported by institutional adoption, ETF inflows, and upcoming halving dynamics. Traders are advised to remain vigilant but prepared for opportunities in the current market landscape.

References:
[1] https://bravenewcoin.com/insights/bitcoin-btc-price-prediction-bitcoin-dips-below-110k-as-traders-watch-105k-support-for-possible-rebound
[2] https://medium.com/@jamenmendes/what-caused-bitcoin-to-fall-from-124-000-108-400-in-two-weeks-d03b969e86be
[3] https://www.moomoo.com/news/post/17816043/record-tr4cking-news-us-appeals-court-rejects-trump-s-global-tariffs