Bitcoin Hit My $85,000 Target. Where Charts Say It’s Headed Next

Key Points

• Bitcoin is expected to decline further, with two scenarios pointing to $80,000 or a retest of the $70,000 level.
• The strengthening US dollar, evidenced by the Invesco DB US Dollar Bullish Index Fund reaching a seven-month high, is likely to pressure Bitcoin.
• Several crypto-related stocks show significant weakness, with Circle 78% below its 52-week high and Bullish down 69% from its debut high.

Bitcoin has become one of the market’s focal points, serving as a barometer for risk sentiment.

I recently wrote about Bitcoin’s setup and suggested that the break below the bear flag near $100,000 would likely lead to a test around $85,000. I didn’t expect it to unfold quite so quickly, but then volatility is a defining feature of the asset class.

Looking ahead, I see two plausible scenarios, both pointing lower:

The first is a move toward $80,000, which could start forming the right shoulder of a developing bearish head-and-shoulders pattern. The second—and in my view more probable—scenario is a retest of the bull-flag breakout right at the very round $70,000 level from late 2024. That breakout gained credibility under the old technical adage that “there is no such thing as a triple top.” This was driven home with how forcefully the $70,000 region repelled price on the five-year weekly chart, leading to swift drawdowns toward $30,000 in 2021 and $15,000 in 2022. Until Bitcoin finds its footing, risk appetite across the broader market is likely to remain fragile.

Bitcoin was trading around $85,000 Friday.

Bitcoin weakness may be from over. Look for a retest of the bull flag breakout near $70,000.

Less noticed than Bitcoin’s collapse is the emerging strength in the U.S. dollar. Bitcoin is priced in dollars, so understanding the relationship is essential. The Invesco DB U.S. Dollar Bullish Index Fund is now trading at a seven-month high and appears to be forming the right side of a long cup base that started last December. The ETF has logged a five-session winning streak and continues to show constructive technical action, including a bullish golden cross. In late October it broke above a bullish inverse head-and-shoulders pattern. Wednesday it pushed through a bull flag, further confirming momentum. This setup suggests it may be making another run at the round $30 level, something it has done in the fourth quarter for three consecutive years. If this positive action persists, it will likely exert additional pressure on Bitcoin.

Invesco DB US Dollar Bullish Index Fund was trading around $28.40 Friday.

US Dollar strength could be a headwind for Bitcoin as it emerges from bull flag breakout.

Individual stocks that have felt the pull of crypto’s recent weakness include:

• Circle is now 78% below its 52-week high. This follows a precise rejection at the round $300 level on June 23, just days after its public debut.
• Bullish is down 69% from its first-day high on Aug. 13 and has declined 10 of the last 12 weeks.
• Coinbase Global shows new downside targets. The stock has closed below its 200-day simple moving average for the past five sessions, and I see a likely pull toward a gap fill at $214 from May 12. What’s particularly concerning is that the doji candle on Tuesday and the bullish hammer on Wednesday did nothing to slow selling. Ultimately, I still expect Coinbase Global to reach $150, the expected move from the breakdown below its bearish descending triangle. Coinbase was trading around $240 Friday.

Coinbase’s next likely move lower would fill in gap near $214 from May.

Doug Busch is the senior technical analyst at Barron’s Investor Circle. His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.