Bitcoin Market Cycle Shifts as Bearish Sentiment Strengthens

Key Insights:

• With the price falling below $90K and volatility rising, Bitcoin's cycle turns bearish as sentiment deteriorates.

• As market sentiment changes, the Fear and Greed Index tracks past price peaks and bottoms.

• While $108K continues to be a crucial barrier, $73K serves as essential support for Bitcoin, influencing future price movements.

Changes are occurring in the market cycle of bitcoin as signs show a change in mood. According to analysts, there is less bullish impetus now, and price swings are in line with market trends.

Following organized phases, the price behavior of the cryptocurrency transitions from an overheated bull phase into a bearish cycle. Increased volatility is evident in the transition, which affects important levels of support and resistance.

Market Cycle Indicator Reflects Bearish Momentum

Bitcoin's market cycle indicator reflects changes in sentiment over the long term, says Ali Charts. The time frame is broken into phases as overheated bull, bull, early bull, bear, and extreme bear.

Bitcoin price movement is plotted with a black line, and orange and blue shaded areas represent the bullish and bearish phases.

Source: Ali Charts 

First, Bitcoin had robust bullish momentum, with the price going up. The price went above $100K, holding the bullish trend for a long time. But the bullish trend gradually lost strength over time, causing the price to fall. The indicator went down as the price of Bitcoin fell below $90K, which marked the beginning of a bearish trend.

A significant market shift occurred as Bitcoin entered the extreme bear phase, coinciding with a sharp price drop toward the $80K range. The indicator turned negative, confirming bearish momentum.

The 30-day moving average followed the downward trend, reinforcing declining sentiment. Meanwhile, the 365-day moving average remained stable, reflecting long-term market behavior. The short-term indicator crossing below the long-term moving average further signaled the bearish shift.

Bitcoin price action was more volatile as the market transitioned from bullish to bearish—sharp movements consistent with changing sentiment, accelerating the price drop. The market remains in the far bear range, and Bitcoin is still under pressure to the downside.

Fear and Greed Index Aligns with Market Movements

Mister Crypto reports that Bitcoin's Fear and Greed Index provides additional insights into market sentiment. The index tracks emotional trends, ranging from extreme fear to extreme greed. Historical data shows that periods of extreme fear coincide with Bitcoin market bottoms, while extreme greed aligns with price peaks.

Source: Mister Crypto

Bitcoin has undergone multiple parabolic surges, followed by sharp declines. Green circles in the time frame indicate market bottoms, aligning with periods of low Fear and Greed Index values. Conversely, red circles highlight extreme greed phases before significant price corrections.

Recent data shows Bitcoin rallying before experiencing a sudden drop. The index moved from extreme greed to lower levels, reflecting shifting sentiment. The price reacted accordingly, correcting from its peak. Historical patterns indicate that such shifts have led to extended volatility.

Bitcoin's market behavior remains cyclical, alternating between bull and bear phases. The correlation between the Fear and Greed Index and price movements continues to hold across different market cycles.

Key Support and Resistance Levels Dictate Market Movements

Crypto Tony says that the price action of Bitcoin in a weekly time frame is a sign of orderly price patterns. There was a strongly bullish trend which began in early 2024, as the price progressed from lower highs. The rally made a series of higher highs and higher lows, which showed good bullish momentum.

The price progressed to a major level of resistance of around $108K, with several rejections. Price was unable to break above the level and reversed. Consolidation continued with Bitcoin trading within $91K support and $108K resistance.

Source: Crypto Tony

An extended drop below $91K support reflected mounting selling pressure. There is a secondary support of approximately $73K, an important level in having been resistant beforehand to the break higher into the mid-2024 bull push.

Depending upon further selling pressure, Bitcoin would test the support. Though there is an intact major uptrend, short-term recent action infers a retraction.

The absence of visible volume trading information implies that price action is due to excessive market activity. The response of the market to the violated support level will determine the future direction. The levels of $108K, $91K, and $73K are still relevant to traders examining Bitcoin's likely price direction.

Market Reaction to Critical Price Levels

Mister Crypto's second observation puts Bitcoin's price action into context against major levels of support and resistance. The currency already demonstrated respect for a major zone on many occasions, confining price falls. However, the price did finally break below the same, causing a sharp sell-off.

Source: Mister Crypto

Following the breakdown, Bitcoin discovered some short-term support at a lower level, prompting an immediate recovery. A strong green candlestick conveyed strong buying momentum, prompting a price turnaround. The price hovered above the previous broken support level, which had become a barrier at this time.

The red horizontal zone remains a significant area of price interaction. Historical data confirms that support often turns into resistance after breakdowns. If Bitcoin fails to reclaim this level, further downward movement is expected. Conversely, a successful reclaim and consolidation above this zone may support an upward trend.

The candlestick patterns reflect increased volatility, with long wicks signaling uncertainty. Bitcoin's market structure follows a defined support, breakdown, and potential resistance confirmation sequence.

The ongoing price action will determine whether the cryptocurrency continues its recovery or faces further downward pressure.