The Last Time Bitcoin Printed This Ugly Candle, It Tanked; Now It Has Returned

The Bitcoin weekly chart has printed a red candlestick in a way that has quietly preceded some corrections. This candlestick appears in the numbers: in the open, the push, the rejection, and the close. That is exactly what happened last week. The candle that formed has now drawn the attention of an analyst who has catalogued its full history on Binance going back to 2017, and what he found is the possibility of another Bitcoin crash.

As noted by a crypto analyst that goes by the name Sherlock on X, the latest Bitcoin weekly candle is one of the ugliest candlesticks that the asset can print. The analyst’s concern was not simply that Bitcoin closed the week in red. It was the way the candle formed and where it closed compared to the previous week.

Bitcoin’s weekly candle met three bearish conditions at the same time. It came in red immediately after a green weekly candle, its body engulfed the previous green candle, and it closed below the low of the previous week. This means buyers briefly tried to extend the rebound in the previous week but were overpowered before the weekly close. 

The week opened at $82,210. Buyers attempted a push higher, failed, and by the close Bitcoin was trading at $77,457, creating a red candle following a green week. That type of candle is important because it does not only show selling pressure. A green week had first given traders room to believe that Bitcoin was holding steady above $80,000, but the following candle erased that progress and closed beneath the prior low. This turned the previous week’s rally into a bull trap.

Interestingly, this exact setup has appeared 33 times on Binance since 2017, and the historical record is heavily tilted to the downside. Over the 12 weeks following each signal, Bitcoin traded at least 3% lower in 31 out of 33 cases, at least 5% lower in 28 cases, at least 8% lower in 25 cases, and at least 10% lower in 23 cases.

The deeper part of the analysis is the average and median drawdown. The average drawdown after this weekly structure was 20.9%, while the median drawdown was 15.8%. Since Bitcoin closed last week at $77,457, a median version of the move would place the price on a further crash to $65,000, while an average version would drag the price close to $61,000.

At the time of writing, Bitcoin is trading at $77,800 and bulls are trying to hold above $77,000. The current weekly candlestick is now green, but there is still enough time for things to change before the week’s close. The current weekly candle is playing out at a time when Bitcoin is under pressure from ETF outflows, and it is currently on a four-day outflow stretch, according to data from SoSoValue.