Bitcoin's Bear Market Bottom Formation: Is a Counter-Trend Bounce Imminent?

Question

Bitcoin (BTC) has experienced a severe pullback from its October 06 peak, with the past seven trading weeks displaying six bearish candles in succession. Technical indicators suggest we’re at a critical juncture where a temporary relief bounce could materialize before the broader downtrend continues.

Historical Context: Pattern Recognition

The current selloff magnitude stands at -32.30%, mirroring two previous market corrections precisely. The January-April 2025 downturn showed identical percentage losses, as did the March-August 2024 correction, both declining by -33.55%. This historical symmetry points to specific price levels where buying interest typically emerges.

Key Support Zone on the Radar

Technical analysis identifies the 86600 - 83600 band as the primary support zone for this bear cycle. This range has shown significance in past corrections and represents where the weekly moving average (MA100) converges with the price action. The loss of the 1W MA50 trendline confirms the bear structure, yet the proximity to MA100 suggests stabilization may be near.

Oversold Conditions Signal Reversal Potential

The weekly RSI indicator is approaching the 30.00 threshold, entering deep oversold territory. Historically, readings at these levels have preceded relief rallies. Should a bounce materialize, the 0.618 Fibonacci retracement level becomes the natural upside target, potentially carrying Bitcoin up to where it could test the daily MA100 (above the 1W MA50).

The Resistance Zone Ahead

However, two significant barriers loom ahead. The daily MA200 has consistently rejected counter-trend bounces in the previous two bear markets. Combined with the 0.618 Fibonacci level, this creates a formidable resistance zone that could cap any relief rally.

The Santa Rally Wildcard

The timing of this potential bounce could coincide with year-end market strength—the traditional “Santa Rally” phenomenon where equities and risk assets experience seasonal buying pressure. This seasonal tailwind might provide additional fuel for an intra-week bounce.

Caution: Bull Trap Risk

While a counter-trend rally appears technically feasible, traders must remain vigilant. This could represent the final bull trap that lures weak hands before the market resumes the larger downtrend toward even lower lows and ultimately tests the 1W MA200 level. The setup remains bearish on the larger timeframe despite near-term relief potential.

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