Bitcoin (BTC) sits at a technical crossroads after losing a crucial support level, leading some market observers to suggest that this week’s price will be decisive for whether the flagship crypto can reclaim upside momentum or extend its recent losses.
Related Reading
Bitcoin 21W EMA Retest To Be Decisive
After closing the week at around $77,450, Bitcoin started the new week falling to a new local low of $76,050. The cryptocurrency had been trading between $76,300 and $82,500 throughout its May rally, failing to break out of the crucial resistance despite multiple attempts.
In a Monday analysis, market observer Rekt Capital noted that Sunday’s drop saw BTC close below the key 21-Week Exponential Moving Average (EMA), around the $78,000 area, after successfully retesting this level as support for multiple consecutive weeks.
The analyst explained that this performance “shows how lackluster the buy-side strength has been at the 21-Week EMA support, producing a limited rally even after multiple successful retests.” It also means the price is positioned for a bearish retest of this level, with any future short-term relief rally potentially turning the EMA into resistance.
He highlighted that a rebound is likely as Bitcoin has now formed a new weekly CME Gap around that area. Therefore, the potential relief rally would turn the 21-Week EMA into new resistance and would also serve the newly formed CME Gap.
“It would turn the old CME Gap area into new resistance; after all, the previous CME Gap served as a Range which has technically been lost given the Weekly Close below the old CME Gap bottom,” the market observer added.
Rekt Capital emphasized that this week is critical for reversing the bearish sentiment, with Bitcoin needing to close above the EMA and at least within the CME Gaps to reclaim its bullish momentum.
BTC Faces ‘Cascading Dumping’ Pattern
Meanwhile, analyst Easy On Chain affirmed that the Bitcoin sell-off may not be over yet, as it is not facing a simple short-term correction, but a “structurally driven crisis fueled by cascading leverage liquidations and deep spot-market fear.”
Based on CryptoQuant data, he highlighted a “clear cascading dumping” pattern in which capitulation from Bitcoin long-term holders triggers panic selling among short-term investors.
The data shows that long-term holders who bought 6 to 12 months ago have an average realized entry of around $110,851, meaning many entered deep unrealized losses territory after the recent collapse.
Since Thursday, on-chain flows reveal heavy exchange inflows from these holders, with the Spent Output Age Bands (SOAB) ratio for 6–12 month coins surging to 10.54%, far from the normal 1% level. Historically, this has led to large-scale capitulation, increasing spot-market selling pressure that ultimately spreads to short-term investors.
Related Reading
In addition, ultra-short-term supplies, which account for roughly 80% of exchange inflows, are currently being dumped at a loss below the critical break-even point (1.0), indicating that most short-term inflows are not profit-taking, but loss-cutting driven by fear.
“The current decline is therefore an internally driven market crisis caused by derivative liquidations, large-scale long-term holder capitulation, and cascading panic from short-term participants,” he concluded, affirming that “until this toxic supply is fully absorbed and sentiment stabilizes, a rapid V-shaped recovery remains unlikely,” and investors should avoid aggressive dip-buying.
Featured Image from Unsplash.com, Chart from TradingView.com