Bitcoin Tests $87K Support, Bear Flag Threatens $60K Drop

Bitcoin’s recent price action reflects a broader retreat from risk assets. After trading around $95,000 over the weekend, the cryptocurrency lost momentum as global markets opened, pressured by fresh geopolitical tensions between the US and the EU alongside movements in Japanese bond markets. This triggered a swift drop from $95,500 to under $92,000. Although a minor recovery followed, Bitcoin slipped again early Tuesday, hitting a low of $87,900 before stabilizing around $89,100. According to data from CoinGecko, this represents a 2% decline over 24 hours and a nearly 6% drop over the past week.

The market turbulence has exacted a heavy toll on leveraged positions. Data from CoinGlass reveals that more than $1 billion in leveraged crypto positions were liquidated as Bitcoin broke below $90,000. This massive unwinding of speculative bets underscores the intense selling pressure and risk-aversion currently gripping the crypto market, coinciding with a flight to traditional safe havens like gold.

The primary concern for technical analysts is the formation of a bear flag pattern on Bitcoin’s daily chart. This pattern emerged following a steep initial decline of nearly 32%, from a peak near $126,000 to $85,000. The subsequent period of consolidation within a rising channel is viewed not as a recovery but as a pause before a potential further drop. Crypto analyst Crypto Patel highlighted the critical nature of the $87,000 support level, stating, “Breakdown and sustained close below this level opens path to $60K liquidity zone.”

This technical projection is echoed by veteran trader Peter Brandt, who has previously noted the risk of Bitcoin falling into the $58,000–$62,000 range if the bear flag pattern completes. The mathematics of the pattern is stark: a breakdown from the $87,000 support could trigger a decline of approximately 31%, squarely targeting the $60,000–$61,000 area. While Michaël van de Poppe, founder of MNF Fund, observes that oversold RSI conditions could prompt a short-term bounce, he cautions this would not constitute a reversal. For a true trend change, Bitcoin would need to reclaim multiple resistance levels that currently sit well above its price.

On-chain and derivatives data paint a picture of persistent selling pressure. CryptoQuant analyst Amr Taha reported a significant spike in activity from large Bitcoin holders, or ‘whales.’ On January 20, over $400 million worth of BTC was transferred to spot exchanges, a move often preceding sales. A similar transfer on January 15 was followed by a sharp price drop to $96,000, suggesting history may be repeating.

Further evidence of bearish sentiment comes from Binance Futures, where the Net Taker Volume—a metric indicating whether buyers or sellers are executing more aggressively—recorded a deeply negative value of -$319 million on January 20. This marks the second time this month the metric has crossed the -$300 million threshold, signaling heavy institutional or large-scale selling pressure. With world leaders convening in Davos and geopolitical concerns simmering, traders are bracing for more volatility, leaving Bitcoin’s immediate fate hinging on a few crucial price levels.