Bitcoin fell to the local support zone at $35.4k. In this area, the decline stopped, but there was no impulsive rebound. On the one hand, this indicates the weakness of buyers and the complete dominance of bears. On the other hand, this may mean the end of the downward movement and a turn in the lateral direction. However, investors are not ready to consider an optimistic option. There is one important argument for this - the break of the shoulder line of the "head and shoulders" technical analysis pattern, which is a harbinger of a bear market.

First, let's look at all the inputs. There is a total panic in the cryptocurrency market, more than 70% of investors are in an unrealized loss. The ratio of shorts and longs has changed towards short positions, and there has been an outflow of capital from crypto funds for the 7th week in a row. In addition, the entire market is in the red zone, and capitalization has fallen to $1.5 trillion.

Judging without emotions, we can conclude that we are in the stage of a classic medium-term correction, nothing more. However, crypto investors were put into fear by the statement of the CEO of Euro Pacific Capital Peter Schiff, who believes that bitcoin is moving below $30k due to the breakdown of the shoulder line of the head and shoulders pattern.

In order to recognize the inconsistency of this assumption, you need to understand the definition of the concept of the "head and shoulders" pattern. The formation of this figure is typical when the asset price peaks. The "head and shoulders" pattern indicates an imminent trend reversal and movement in the opposite direction.

Looking at the Bitcoin charts, we can see that the formation of the figure was not preceded by any of the trends. BTC/USD quotes moved in a wide flat range of fluctuations without a hint of a trend. Therefore, this formation should be taken as a normal price movement within a wide area of $69k-$30k.

For clarity, let's compare the formation of the "head and shoulders" pattern during the May correction. clearly shows that the figure was formed after the classic five-wave growth structure. Now the situation is different.

Now let's look at the current situation in the market. There is no reason to panic, as the cryptocurrency is within the usual correction that we saw in May 2021. Between April and June 2021, Bitcoin corrected by 53% after reaching the new ATH.

Between November 10 and January 24, Bitcoin lost 51% of its all-time high. There was no bear market in 2021 and judging by the price movement, the current correction is near its final point. I assume that the asset can bring the fall to 55% and test the $30k-$35k area. However, even such a drop should not be considered a bear market where the price drops as much as 80% of ATH. Right now, there is no reason to panic, and as long as the price holds the $30k level, the probability of a wide price reversal is high.