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Analysts caution that bitcoin’s extended inability to surpass its current range is shifting the technical perspective towards bearish sentiment.
What to know:
- Leading cryptocurrencies have declined 8-11% in the last week, with bitcoin lingering around $62,900 and restricted within a $60,000-to-$70,000 trading range.
- Alternative coins are lagging behind bitcoin as selling pressure reaches five-year highs, resulting in a gradual downturn that lacks the sharp sell-offs that typically draw in buyers.
- A wider risk-off sentiment linked to an emerging “AI scare trade” in the stock market is impacting cryptocurrency markets, and analysts indicate that bitcoin’s ongoing struggle to break above its current range is leading to a more bearish technical outlook.
Macro concerns stemming from a rising AI disruption trade are intensifying inherent weaknesses in crypto, with major assets recording 8-11% weekly declines across the board.
On Tuesday, bitcoin fell to approximately $62,900, down 2.1% for the day and 7.5% over the week, continuing a slow decline that has yet to yield either a distinct breakdown or a significant rebound.
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The price movements have confined the market within the $60,000-to-$70,000 range established after the February 5 drop — a range that increasingly appears to be more of a holding pattern rather than a stable base awaiting a catalyst.
Alternative cryptocurrencies are experiencing greater challenges. Ethereum is trading near $1,829, down 8% for the week. XRP decreased by 10.8%, Solana’s SOL dropped 11.3%, and dogecoin fell by nearly 10%. This underperformance among major assets indicates a market where risk appetite is diminishing, even for bitcoin.
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CryptoQuant has identified sell-side pressure among alternative coins at five-year peaks, indicating that holders are actively distributing in a market where buyers are limited outside of the top market capitalizations.
This type of structural selling usually leads to gradual price declines without the sudden sell-off spikes that attract buyers, resulting in a slower drop that poses challenges for momentum traders trying to capitalize on price movements.
FxPro’s chief market analyst Alex Kuptsikevich noted in an email that bitcoin’s recent recovery attempts are appearing more like consolidation rather than a reversal. He highlighted a bearish pennant forming on the daily chart, suggesting that a drop below the mid-$65,000 range would confirm further downside, while a breakout above $70,000 would negate the pattern.
He further characterized the $60,000-to-$70,000 range as historically important — a zone that served as a ceiling throughout the 2021 cycle and now seems to be a battleground between long-term holders and newer investors looking to minimize losses.
AI fears return
Compounding the pressure is a macroeconomic factor that, while not directly linked to crypto, is siphoning off the same pool of risk capital.
A report from Citrini Research highlighted an emerging “AI scare trade” this week, cautioning about potential widespread economic disruption due to artificial intelligence across delivery, payments, and software sectors. This warning sparked selling in technology-related equities as investors reassessed which companies might gain from AI adoption and which might face obsolescence.
This broad recalibration of risk typically affects crypto with a delay. Digital assets do not always decline in sync with equities, but they are affected by similar shifts in liquidity and positioning that prompt risk-off movements — and currently, the sentiment in both markets is aligned.
Bitcoin is now 48% below its peak in October and sits 5.5% below its 2021 high of $69,000. As it remains within this range without reclaiming higher levels, the technical outlook increasingly leans towards bearish sentiment.
