Bitcoin Bullish Divergence Signals Potential $116K Rally

Bitcoin’s recent failure to reclaim the $90,000 level for the third time this week masks a potentially significant technical development. Market analyst Javon Marks has identified a regular bullish divergence on Bitcoin’s 4-hour timeframe, where the asset continues to print lower lows while momentum oscillators form higher lows. This pattern typically signals a shift in pressure from sellers to buyers and often precedes trend reversals. According to Marks, this setup suggests a potential recovery targeting $116,000 or higher, though the price must first break above key short-term resistance levels to validate the pattern.

The current technical picture shows Bitcoin hovering around $89,000 at press time, down 1% on the day and 13% over the past seven days. Despite this recent weakness, the momentum divergence observed by Marks indicates that selling pressure may be weakening even as prices continue to make lower lows. This disconnect between price action and momentum indicators has historically been a reliable signal for trend changes in Bitcoin markets, providing technical analysts with early warning signs of potential upward movements.

Analyst Lennaert Snyder has identified $93,100 as a crucial resistance level that Bitcoin must overcome to confirm any bullish reversal. Snyder notes that Bitcoin found support at $88,900 and has since rebounded toward $93,100, where it is currently testing that level. So far, the move has been met with selling pressure, leading Snyder to maintain a short-biased stance unless Bitcoin can achieve a decisive close above $93,100. Should this occur, he sees room for a push toward $95,600 as the next logical target.

Snyder also outlined an alternative scenario where Bitcoin returns to sweep the $88,900 lows and shows a strong rebound wick, which could signal a bottom formation. “I prefer a strong wick on the bottom and a reversal after,” he posted, suggesting that a clear rejection of lower prices could provide even stronger confirmation of a trend change. With US Non-Farm Payroll data expected, market volatility may increase, potentially providing the catalyst needed for a decisive break in either direction.

Additional analytical perspectives reinforce the potential for a significant Bitcoin recovery. Analyst EGRAG Crypto notes that Bitcoin is currently testing the 21-month Exponential Moving Average (EMA), a critical level that has historically served as a bull market support line. “Hold 21 EMA = Bull Market Continues,” he stated, pointing out that Bitcoin has never entered a bear market without closing a full monthly candle below this line. Past cycles have used this level as a springboard for substantial upside moves.

On-chain data provides further evidence supporting a potential bottom formation. Bitcoin’s realized loss margin has fallen to -16%, according to CryptoPotato, tracking the average losses realized by sellers. During past cycles, similar drops below -12% often appeared near market lows. The current reading suggests that many traders are exiting positions deep in the red, typically a sign of capitulation that precedes market recoveries. Meanwhile, Bitcoin’s realized price sits near $114,000, creating a significant gap that shows the extent of unrealized losses in the market.

Titan of Crypto adds another historical parallel, pointing to a recurring setup that looks similar to the 2021-2022 cycle. In both cases, a bearish divergence marked a local top, followed by a hidden bullish divergence. This pattern is now developing again while Bitcoin trades inside a fair value gap and above rising trend support. Combined with broader macro concerns including rising yields in Japan and stress in US banks, these technical and on-chain factors suggest Bitcoin could be positioning for a significant upward move toward the $116,000 target identified by multiple analysts.