Crypto Winter 2.0? Charts Mirror 2021, but Momentum Is Weaker

Bitcoin (BTC) is repeating a dangerous technical pattern last seen in late 2021, according to a detailed analysis from market analyst Material Indicators.

The chart structure, characterized by a tightening range and failing key support levels, suggests the coming weeks are pivotal for determining the next major price trend. If this pattern continues, the analyst says it could lead to a long-term price drop, similar to what happened during the 2022 crypto winter.

The Fractal That’s Spooking Traders

In their technical breakdown, Material Indicators highlighted that Bitcoin’s current weekly price action bears an uncomfortable resemblance to the structure that preceded the 2022 bear market.

“Bitcoin is trading similarly to something we saw in the prior cycle, and we’re approaching the part where the trend was decided last time,” they noted.

The similarities extend to price trading between the 100-week and 50-week Simple Moving Averages (SMA), mirroring the final consolidation before the last major breakdown.

However, a critical difference makes the current setup potentially more vulnerable. In the current cycle, BTC has already lost support from the 50-week SMA, and its weekly Relative Strength Index (RSI) has broken below a key level of 41. This dual breakdown happened roughly six weeks ago, whereas in late 2021, these levels held for months.

Material Indicators stated it “indicates weaker underlying momentum than the comparable phase in the prior cycle.” According to them, the most immediate risk is a death cross on the weekly chart, where the 21-week SMA is estimated to be just two weeks away from crossing below the 50-week SMA, an event that historically confirms a shift to a macro downtrend rather than marking a bottom.

They believe the final test will be Bitcoin’s ability to mount a convincing recovery and reclaim the 50-week SMA as support. In their opinion, failure to do so would dramatically increase the probability of a deeper corrective phase.

In their opinion, a major obstacle to any rally is significant sell-side liquidity stacked near the $100,000 level, which could cap any upside momentum.

“The next two to three weeks are pivotal,” concluded the analysis. “Either BTC mounts a convincing reclaim… or the macro trend risks tipping decisively more bearish.”

A Market of Diverging Fortunes

As of December 30, Bitcoin is trading at around $87,400, down nearly 3% over the past 24 hours and more than 30% from its October all-time high above $126,000.

Before this, the OG crypto had briefly reclaimed the $90,000 level, but analysts were quick to question its sustainability. Ali Martinez characterized the move as a potential “dead-cat bounce,” pointing to negative net capital flows exceeding -$4.5 billion as evidence that “money is currently leaving crypto rather than entering it.”

This exodus is particularly visible in spot Bitcoin ETF products, which have seen consistent outflows for months, shedding billions in assets under management. But despite the gloom surrounding Bitcoin, other sectors of the market are attracting capital; specifically, investment products for XRP and Solana have drawn $1.14 billion and $1.34 billion in net inflows, respectively.

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