In a recent X post, crypto trader Merlijn The Trader indicated that Bitcoin (BTC) appears to be forming a ‘megaphone pattern’, hinting at the potential for upward movement. It is crucial for BTC to maintain a price level above $72,000 for this pattern to develop.
Is Bitcoin Ready for a Buy? Megaphone Pattern Ahead
Earlier today, BTC fell below the pivotal $80,000 level, reaching a low of $78,390 on the Binance exchange. As of now, the prominent digital currency has a market capitalization of $1.57 trillion.
Despite the recent decline, analysts remain optimistic regarding BTC’s long-term growth trajectory. Merlijn The Trader shared a monthly trading chart, indicating that Bitcoin is tracing a broadening wedge, commonly referred to as the megaphone pattern.
For those unfamiliar, the megaphone pattern, or broadening wedge, is a technical chart formation characterized by Bitcoin’s price making higher highs and lower lows, forming an expanding shape. This pattern signifies rising volatility and market indecision, often leading to a significant breakout or breakdown.
There is a risk of BTC experiencing a downturn from its current range; however, historical data suggests that the asset is likely to surge to a higher price level. The chart illustrates how BTC has historically broken out to the upside—marked in green—from previous market cycle peaks, followed by a successful retest of the breakout and a subsequent parabolic rise.
The chart also indicates that peaks in market cycles have often aligned with an MVRV Z-Score trendline. The current MVRV Z-Score remains significantly below the red trendline, implying that BTC may still have potential for growth before a notable correction occurs.
To elaborate, the MVRV Z Score for Bitcoin is a measure that contrasts the market value of BTC with its realized value, assisting in the identification of overbought or oversold conditions. A high MVRV Z-score suggests Bitcoin may be overvalued, while a low score indicates a potential undervaluation.
Presently, BTC’s MVRV Z-Score is around 2. Historically, during the last three market cycles, this score has peaked just above 4.
BTC Remains in Fluctuating Territory
Even with US President Donald Trump fulfilling his commitment to foster a favorable regulatory landscape for cryptocurrencies and launching a Strategic Bitcoin Reserve (SBR), the digital asset’s price has not mirrored these positive developments.
Analysts believe that rising tariff tensions and the likelihood of an economic recession may be adversely impacting BTC’s price movement. Analysts at Coinbase point to the recent BTC downturn as a result of the “lack of positive catalysts.”
Additionally, crypto analyst Ali Martinez has recently noted that BTC might experience further declines down to $75,000 before it finds relief from the ongoing price adjustment. Currently, BTC is trading at $78,500, representing a 4.5% drop in the last 24 hours.
Featured Image from Unsplash.com, Charts from X and TradingView.com
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