Tuesday witnessed a Bitcoin-style rollercoaster, with the cryptocurrency initially soaring to new all-time highs surpassing $69,000, only to tumble by 10% at 3:00 p.m. ET, on track for its steepest daily decline since November 2022.
Among the swirling speculations surrounding this dramatic downturn—flash crash, market illiquidity, fat fingers, profit-taking behaviors, and more—no definitive explanation has emerged in the crypto community.
Yet, it’s possible that the truth is far more straightforward than the speculation indicates.
Bitcoin has been and will always be a high-risk investment, drawing investor flows during periods of bullish market sentiment. Historically, it has exhibited a strong correlation with tech stocks.
Thus, on a day when bearish sentiment grips Wall Street, the highly speculative segments of the market, including Bitcoin and other cryptocurrencies, tend to suffer disproportionately.
At the time of writing, the tech-heavy Nasdaq 100, tracked by the Invesco QQQ Trust QQQ, had plummeted by over 2%.
Chart: Bitcoin Eyes Worst-Performing Session Since Early November 2022
![](https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/05160551/image-9-1024x495.png)
BTC/USD Technical Analysis
Technical signals emerging from the daily Bitcoin chart suggest two potential patterns:
- A bearish engulfing
- A bearish RSI divergence
![](https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/05164000/image-1-4-1024x495.png)
Bearish Engulfing Formation On BTC/USD Daily Chart
Today’s red candlestick fully engulfs the bullish candle from the previous day, unless bitcoin manages to close the session above $63,200. In essence, the bearish candle covers the entire price range of the preceding bullish candle.
Among traders, the bearish engulfing pattern is considered a robust signal, indicating a shift in market sentiment from bullish to bearish.
Traders often interpret this pattern as a signal to sell or take short positions, anticipating further downward movement in the asset’s price.
Bearish RSI Divergence On BTC/USD Daily Chart
Since Feb. 9, the Relative Strength Index (RSI) calculated on Bitcoin’s daily chart has consistently indicated overbought levels, with a brief exception from Feb. 22 to Feb. 25.
During the session in which the crypto reached a new all-time high, soaring to $69,324 on the Coinbase exchange at 10:00 a.m. ET Tuesday, the RSI is now exiting the overbought zone, indicating what is technically known as bearish RSI divergence.
Bearish divergence occurs when the price sets a new high in a session, but the strength of its upward movement is waning, signaling that buyers may be exhausted from pushing prices further upwards.
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Image created using artificial intelligence with Midjourney.
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