Bitcoin’s bear flag just broke – what it could mean for the next move

Bitcoin has just broken down from a key support level around $64,000, confirming a bear flag pattern that has been forming for weeks. For traders and long-term holders alike, this move raises an important question: is this the start of a deeper correction, or just another fake-out before the next leg up?

What is a bear flag and why this breakdown matters

A bear flag is a classic continuation pattern that often appears in downtrends. It usually starts with a sharp drop in price (the “flagpole”), followed by a period of consolidation where price grinds higher in a tight, upward-sloping channel (the “flag”).

That flag is made up of a series of higher highs and higher lows, but crucially, it’s moving against the larger trend. The expectation is that once support at the bottom of the flag breaks, price will continue lower in the direction of the original move.

In Bitcoin’s case, price had been holding a support area near $64,000. That level finally gave way, with BTC dropping to around $62,272. This loss of support is the first key step in confirming the bear flag.

How traders project the potential downside

Once a bear flag breaks, traders often estimate a potential target by measuring the size of the original drop and projecting it from the breakdown point.

Here’s how that looks for Bitcoin right now:

• The initial drop (flagpole) ran from around the $83,000 area down to roughly $59,000.
• That distance is then “copied” and placed at the point where the flag breaks.

Using this method, a possible downside target appears in the mid-$40,000s, roughly around $45,700–$46,300. It’s not a guaranteed destination, but it’s a reasonable area many technical traders will be watching if the pattern fully plays out.

The retest: turning old support into new resistance

In many clean bear flag scenarios, price doesn’t just fall straight down after losing support. Instead, it often bounces back up to retest the broken support level, which then acts as resistance.

In this case, that would mean Bitcoin could see a short-term rally back toward the old support zone around $64,000. If the bounce stalls there and price is rejected, it would strongly confirm that level as new resistance and increase the odds of a deeper move lower.

However, this retest is not guaranteed. Sometimes, as seen in previous moves, Bitcoin simply slices through support and continues to dump without offering a clean second chance to exit or short.

When bear flags fail: lessons from earlier in the year

This isn’t the first time Bitcoin has formed a bear flag in this cycle. Earlier in the year, after BTC dropped to around $60,000, price formed another rising channel that looked like a textbook bear flag.

At that time, the expectation was similar: lose support, retest, and then head lower. Instead, Bitcoin invalidated the pattern by closing back inside and then above the flag structure in early April. That move effectively cancelled the original bear flag, and price pushed higher before eventually rolling over again.

Some traders tried to “redraw” or extend the flag to fit the new price action, but that can be a slippery slope. Once a pattern is invalidated by a clear breakout in the opposite direction, it’s usually better to accept that and reassess rather than forcing the chart to match the original idea.

Interestingly, even though that earlier bear flag failed in the short term, Bitcoin still ended up trending lower later on. The destination was similar, but the path to get there was very different from what the pattern first suggested.

What current indicators say about Bitcoin’s trend

Beyond the bear flag itself, several indicators are still pointing to a bearish environment for Bitcoin.

On-balance volume (OBV): sellers still in control

On-balance volume (OBV) is a simple but powerful indicator that tracks cumulative trading volume. It adds volume on up days and subtracts it on down days, helping traders see whether buyers or sellers are really driving the market.

Right now, OBV is trending lower, and even recent bounces in price have come on relatively weak volume. When OBV is below its moving average (for example, a 21-day simple moving average) and pointing down, it suggests that selling pressure is dominating. That’s exactly what we’re seeing on Bitcoin’s chart.

Another key point: recent sell-offs have not yet matched the kind of huge volume spikes seen during major capitulation events earlier in the cycle. That supports the idea that a final, more violent flush could still be ahead.

Trend tools: fast rallies in a slow downtrend

Some traders use proprietary trend tools built from multiple moving averages to gauge whether the broader trend is bullish or bearish. In this framework, the slowest moving average often acts as the “truth” of the trend, while faster ones react more quickly to short-term price swings.

Despite countertrend rallies since April, the slowest trend line has remained pointed down, signaling that the dominant trend is still bearish. Each time Bitcoin has tried to rally against that downtrend, it has eventually rolled over and continued lower.

One useful behavior to watch is how price reacts when it touches the fastest of these moving averages after a strong sell-off. Frequently, the first touch of that fast line in an oversold market leads to a rejection and another leg down. That’s exactly what just happened: Bitcoin bounced up to the fast line near $66,800 and was rejected, dropping more than 6% soon after.

Early bullish signals that may not be enough (yet)

Not everything on the chart is screaming doom. Some early bullish divergence signals have started to appear, suggesting that downside momentum could be weakening.

Divergence occurs when price makes a new low, but an indicator (such as a momentum or volume-based tool) makes a higher low. This can be a hint that sellers are losing strength and a reversal may be on the horizon.

However, these signals are often early—sometimes very early. In past examples, bearish divergence appeared weeks before Bitcoin actually topped out and reversed. The same applies to bullish divergence at potential bottoms.

Right now, a bullish divergence has flashed while the slow trend line is still pointing sharply down. That combination suggests that, although a future reversal is being hinted at, the broader downtrend remains in control. On its own, this is unlikely to be enough to “save” Bitcoin from further downside if the bear flag continues to play out.

Stablecoin dominance and the hunt for capitulation

Another important piece of the puzzle is stablecoin dominance—how much of the total crypto market cap is sitting in stablecoins like USDT and USDC. When traders sell risk assets and move into stablecoins, stablecoin dominance rises. When they rotate back into Bitcoin and altcoins, it falls.

During sharp Bitcoin pullbacks, combined stablecoin dominance tends to spike. Recently, it jumped again as BTC sold off, and there are two key levels to watch:

• Around 12.5%: a first target that, if broken, signals growing risk-off behavior.
• Around 13%: an “accumulation trigger” zone where past spikes have lined up with major capitulation events and attractive long-term buying opportunities.

If stablecoin dominance can push above 12.5% and then 13%, it would suggest that fear and sidelined capital are reaching the kind of extremes often seen near cycle lows. To get there, though, Bitcoin likely needs to experience a deeper, more aggressive sell-off—exactly the kind of move a fully played-out bear flag could deliver.

Why a deeper dump might be healthy in the long run

As uncomfortable as it is, a clean, decisive flush can be healthier for the market than a slow grind lower. A sharp capitulation:

• Forces weak hands to exit.
• Clears out excessive leverage.
• Pushes stablecoin dominance higher as traders move to the sidelines.
• Sets the stage for stronger, more sustainable recoveries.

This is why some traders are actually hoping the bear flag completes and Bitcoin revisits much lower levels, potentially in the mid-$40,000s. It would be painful in the short term, but it could also mark the kind of washout that often precedes a new bullish phase.

If you’re interested in how this fits into the broader bear market structure, it’s worth looking at how previous cycles evolved. Articles like Bitcoin entering the third stage of the bear market and why the hardest part of this Bitcoin bear market might be over can provide helpful context.

Big picture: from top year to bottom year

Zooming out, the current weakness in Bitcoin fits into a broader cycle view where one year tends to act as a “top year” and the following as a “bottom year.” In that framework, the market spends one phase putting in a major high and the next phase grinding or flushing down to form a long-term low.

If this cycle follows a similar path, the ongoing correction and bear flag breakdown might be part of a larger process of building a bottom rather than the start of a permanent collapse. That doesn’t make the drawdowns any easier emotionally, but it can help long-term investors frame what’s happening.

For now, the key things to watch are:

• Whether Bitcoin retests the broken support around $64,000 and gets rejected.
• How OBV and other trend indicators behave—do they keep confirming a downtrend or start to flatten out?
• Stablecoin dominance levels, especially the 12.5% and 13% zones.
• Any signs of true capitulation in volume and price action.

Until those signals shift convincingly, the charts suggest that Bitcoin’s bear flag is active, the trend is still down, and patience will be essential for anyone waiting on the next major bottom.