Bitcoin is Forming A Bearish Engulfing Pattern Raising Concerns of a $60,000 Retest

Bitcoin’s repeating bearish engulfing trend and spot ETF outflows boost odds of sub-$60K BTC
Bitcoin forms a daily bearish engulfing candle, historically indicating a potential reversal
Spot Bitcoin ETFs saw $79M in outflows, signaling institutional investors taking a pause

Bitcoin has formed a bearish engulfing candle on the daily chart, indicating a potential reversal in the short-term or long-term. This bearish pattern has a 60-70% success rate and comes after Bitcoin failed to move above $70,000 on October 21.

Previous Engulfing Candles Preceded Steep Drops

Over the past seven months, each bearish engulfing pattern near a range high has been followed by a steep correction. The drawdowns became progressively deeper after each occasion, with prices dropping as much as 26% between July 29 to August 5.

Bitcoin $BTC is Forming A Bearish Engulfing Pattern Raising Concerns of a $60,000 Retest 👇https://t.co/QDD5XTnzeb
— BlockNews.com (@blocknewsdotcom) October 23, 2024

Futures Market Impact on Spot Prices

Bitcoin’s futures and derivatives market has played a significant role in recent price action, with open interest exceeding $40 billion as prices rallied to $69,000. However, negative spot orderbook CVD continues to plague Bitcoin, highlighting a lack of spot buyers on exchanges. Historically, elevated open interest, negative spot CVD, and a bearish engulfing pattern result in downside for Bitcoin. A drop to $60,000 would align with this setup.

Institutional Investors Pull Back

With Bitcoin failing to move above $70,000 on October 21, institutional investors may be tapping the brakes, as Bitcoin ETFs saw an outflow of $791 million on October 22. This comes after $26 billion of inflows were added between October 10 and October 22. The cooldown indicates some institutions are sidelined with Bitcoin struggling at a key resistance level.

Conclusion

Bitcoin’s technicals and market dynamics point to an increased chance of a pullback. The historical data shows bearish engulfing candles near local highs preceded significant corrections of 20% or more. Institutional outflows also signal reduced buying pressure at current levels. Bitcoin may need to establish support near $60,000 before another leg higher.

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