Bulls eye past Bitcoin patterns… "Price surge possible after sharp drop"

Last weekend, about $20 billion worth of leveraged positions were liquidated, causing Bitcoin to briefly plunge into the low $100,000s, but some bulls view this crash as a "precursor to a rally" similar to 2020 and 2024.

According to CoinDesk on the 14th (local time), the recent plunge resembles a 'market reset (washout)' pattern that clears overheated short-term leverage. In the past, large-scale liquidations during the March 2020 coronavirus-driven crash, the May 2021 China shutdown, and the volatility period ahead of the April 2024 Ethereum ETF approval were followed by strong rebounds within a few weeks.

This time too, Bitcoin fell below the 50-day and 200-day moving averages, clearing short-term speculative positions, leading some to assess that a similar structural reset occurred. Alex Kuptsikevich, an analyst at FxPro, said, "This decline was closer to emotional liquidations, and after weak positions were removed the market is building a new base," adding, "There is a high likelihood that the recovery flow seen in the past will be reproduced."

Market sentiment is also gradually recovering. The fear and greed index rebounded from 24 to 38, and total crypto asset market capitalization rose 4.4% from Sunday's low. Investors are viewing this plunge as a 'necessary cleansing process' and are watching the possibility of entering a short-term recovery phase similar to past patterns.