Are We Approaching a Bear Market? Technical Signals Point to a Potential Cycle Peak

The cryptocurrency market is exhibiting classic characteristics of a bull market reaching exhaustion levels. When daily charts display significant volume spikes alongside sharp price advances, technical analysts recognize this as a critical inflection point—often the precursor to a prolonged consolidation or reversal phase.

The Distribution Phase Scenario

Current market structure suggests we may be in the final accumulation and distribution stages of this bull cycle. Major market participants, having completed their accumulation phases, are likely transitioning into position management. The typical sequence involves: institutional liquidation of leveraged shorts at higher levels, followed by smart money profit-taking, and finally retail traders discovering the reversal too late.

Price Structure and Resistance Analysis

The market previously tested the 123,218 resistance level—a significant technical hurdle. Technical theory would anticipate a pullback into the 110,000-112,000 support zone following such tests. Subsequent rebounds faced resistance near 120,800, where the market established secondary highs.

Following this lower high formation, the market later demonstrated sufficient momentum to break above the 120,800 level, liquidating previously positioned shorts and adding liquidity to the move. Long upper shadows on daily candles at these elevated prices signal emerging selling pressure from underwater holders—a warning flag for bulls.

The Bull or Bear Market Question

The critical technical indicator to monitor is the weekly timeframe MACD divergence, which traditionally signals the beginning stages of bear market conditions. While short-term price action may continue testing previous highs, such moves often represent final distribution rather than genuine breakout strength.

If the market breaks above current resistance around 128,888, we would enter pure price discovery territory. However, this upside exploration space is increasingly constrained. A consolidation zone between 128,888-130,000 would likely establish a multiple-top formation—a textbook bearish pattern.

Current Market Position

The analysis points to several key factors: the market is substantially closer to bear market initiation than most recognize; we are likely witnessing the final peak-building phase of the bulls; short-term volatility will include multiple retests of previous highs; and institutional distribution is probable in the 128,888-130,000 range.

Near-term support levels around 119,300 may offer tactical re-entry points for final tests of previous highs. However, the primary technical thesis remains unchanged: the bull market cycle is approaching its concluding phase, with bear market conditions potentially emerging once weekly divergence signals fully develop.