Bitcoin's Volatility: Descending Triangle Warns of Potential Crash Below $95,000

Bitcoin (BTC), the world's largest cryptocurrency, has experienced volatility and unpredictable pricing this month, with its value falling from an all-time high of $109,000 to a range between $98,000 and $95,000 since February 3rd. This volatility comes amidst macroeconomic developments, and analysts have noted the formation of a descending triangle at a higher time frame, suggesting a potential crash below the $95,000 mark.

On-chain analyst Martuun has observed a negative turn in BTC's inter-exchange flow pulse (IFP), indicating a declining interest from investors in the digital asset. Historically, BTC is typically transferred from a spot market to a derivative market during an uptrend, as this instills investor confidence in the coin for the long term. However, when the price shows any weakness, a bearish trend takes over, and BTC starts flowing from the futures to the spot market as investors brace themselves for a potential downturn. This pattern was observed on February 16th, leading to a dip in BTC's pricing.

BTC researcher Axel Adler Jr. has pointed out that this is not an isolated event, as liquidation dominance reached close to 25% in January 2022, just a few days after the record high. This market dominance marks the beginning of a bearish market. Although a possible slump is coming, Adler believes that the market is still under control, with strong demand during corrections and buyers actively "buying the dips," limiting the depth of Bitcoin's decline. While historical data suggests that a slump or dip might be arriving soon, investors should not panic, as this is just the cyclic nature of the coin.