Bitcoin (BTC) price is currently exhibiting a 3% decline after a strong weekly performance in the last week. Adding to this, Bitcoin’s daily chart signals a historically bearish pattern, which has sparked concerns about another re-test of the $60,000 level.
Bitcoin forms a daily bearish engulfing candle
Bitcoin’s 2.4% decline on Oct. 21 formed a bearish engulfing pattern on the daily chart. A bearish engulfing pattern indicates a short-term or long-term reversal, and it has a success rate of 60% to 70%, depending on other market confirmations.
Bitcoin 1-day chart. Source: Trading View
Over the past seven months, each bearish engulfing pattern near a range high has been followed by a steep correction. The drawdowns became progressively deeper after each occasion, with prices dropping as much as 26% between Jul. 29 to Aug. 5.
However, the major bearish concern stems from another set of events that have directly impacted prices over the past few months.
Bitcoin’s futures and derivatives market has played a significant part in BTC’s recent price action, with Bitcoin’s open interest exceeding $40 billion as the price rallied to $69,000.
Bitcoin open interest, spot CVD delta and price chart. Source: X.com
However, a negative spot orderbook CVD continues to plague Bitcoin, which highlights the lack of spot buyers on the exchanges. As observed in the chart, an indirect correlation with elevated open interest, negative spot CVD, and a bearish engulfing pattern generally results in downside price action for Bitcoin.
Keeping this in mind and BTC’s correction track record from previous setups, a drop to $60,000 would not be abnormal.
Related: Bitcoin to benefit from rising hashrate, inflation fears, crypto-friendly president
Spot Bitcoin ETFs $79M in outflows
With prices failing to move above $70,000 on Oct. 21, Bitcoin institutional investors may have taken their foot off the pedal, as US ETF registered an outflow of $79.1 million on Oct. 22.
Previously, net negative ETF inflows were observed back on Oct. 10 with a $81.1 million outflow.
Bitcoin ETF flow chart. Source: Farside.co.uk
Between Oct. 10 and Oct. 22, a whopping $2.6 billion in inflows were added, taking the total assets under management reaching an all-time high of $65 billion.
However, the current cooldown indicates that some institutions are potentially sidelined, with BTC struggling at a key resistance level.
Related: Bitcoin traders expect price pullbacks, but $73K remains the short-term target
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.