Bitcoin bull flag and standard profit taking hint at eventual rally to new BTC price highs

Key takeaways:

• Traders expect a Bitcoin price pullback to $90,000, but a bull flag could break out to new highs if profit taking near the range highs reduces.

• On-chain data suggests the current profit taking is too weak to extinguish Bitcoin’s current price momentum.

Bitcoin (BTC) price has spent the bulk of the week pinned below $104,000 to $105,000, which many analysts have labelled as a resistance zone, but an alternative view suggests that BTC is simply consolidating within a bull flag.

A bull flag is a continuation pattern that is characterized by a period of sideways price action following a sharp uptrend, and when the structure confirms or breaks from the trendline resistance, the uptrend continues. 

While the range-bound trading portion of the flag is said to represent indecision from buyers and sellers, in this scenario, the absence of buy volume is the primary culprit. As shown in the TRDR.io chart below, Bitcoin’s explosive move to $105,900 from $74,400 was accompanied by large liquidations in the margin markets and robust spot volumes, which aligned with several days of billion-dollar spot BTC ETF inflows. 

During this three-week period, several US-based and international companies also announced plans to purchase Bitcoin and establish BTC treasuries. The spot and futures cumulative volume delta, along with the open interest metric on the chart show traders selling near the range highs and the absence of new long leverage and significantly sized spot positions being opened in this area, whereas drops to range low (bull flag support) sees bids filled on the spot side, but there is still limited use of margin for fresh longs. 

Bitcoin’s recent cool-down phase is a normal outcome after the near 40% recovery that started on April 8, and the loss of upward momentum resulting from profit-taking in futures markets near the current range high is also to be expected. 

Bitcoin short-term holder supply profit and loss data from Glassnode supports this view, as shown in the chart below. The onchain data company highlighted profit taking for short-term traders but explained that it does not exceed the statistical norm, leaving room for further price upside. 

“Recently, the magnitude of STH Realized Profit has surged to almost +3 standard deviations above its 90-day average, reflecting a notable uptick in profit realization. In past cycles, particularly during rallies towards the ATH, this metric has historically climbed to over +5 standard deviations of more. This signals that much stronger profit-taking pressure is often required to overwhelm the inflow demand.” 

Related: Bitfinex Bitcoin longs total $6.8B while shorts stand at $25M — Time for BTC to rally?

Bitcoin should test underlying support before moving higher

With the bulk of Bitcoin’s apparent sell-side liquidity absorbed during the move to $105,000, some analysts warn that a brief flush down to test $100,000 to $90,000 as support could be the next move for BTC price. 

Bitcoin market liquidity resource Material Indicators said, barring “a serious catalyst,“ […] BTC has a legit support test at $100K, and FireCharts show that the order book is priming for that with asks stacking and bids moving lower.” 

Sharing his view with X followers, analyst Daan Crypto Trades said that the bulk of bullish and bearish narratives with the potential to impact Bitcoin’s price action have “cleared up” and he noted that BTC price has stalled near its all-time high while stocks have continued to rally after President Trump’s US-China trade deal was confirmed. 

The analyst said that “$90K remains my long-term line in the sand for spot exposure,” adding that he is “cautiously bullish” with price above $90,000 but that is dependent upon how US equity markets perform in the short term. 

“I would not be surprised to see a short-term flush if stocks were to roll over and make a higher low somewhere. Considering most stocks moved 30% to 50% in a single month, this wouldn’t be that crazy either.” 

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.