Bitcoin remains on the defensive, despite yesterday’s sharp recovery from $14,000 levels.

Data source OnChainFX indicates the world’s largest cryptocurrency by market capitalization has depreciated by 4.54 percent in the last 24 hours. As of writing, CoinDesk’s Bitcoin Price Index is at $14,750 levels.

The BPI fell to a low of $13,957.19 at 15:14 UTC yesterday, reportedly due to a sell-off triggered by price data site CoinMarketCap’s unannounced decision to exclude three Korean exchanges from its averages.

However, bitcoin (BTC) was already on the back foot, possibly due to fears of China crackdown on the bitcoin mining industry in the country.

The BPI’s failure to hold above $15,000 today only underscores the bearish undertone in BTC. Further, the technical charts indicate BTC is still not completely out of the woods.

Bitcoin chart

The above chart (prices as per Coinbase) shows:

• Yesterday’s recovery from the low of $14,000 ran out of steam at a high of $15,384. The retreat to sub-$15,000 levels indicates an increased risk of a downside break of the bear flag/rising wedge pattern.
• The 50-day moving average (MA) is sloping upwards in favor of the bulls and could offer support at $14,030 levels.
• The bulls have failed to capitalize on a favorable setup. Despite the higher low pattern (marked by circles) along the 50-day MA and a higher high pattern, prices have dropped to sub-$15,000 levels. The price action now indicates the bear grip is strengthening.

An argument is being put forward on social media that an inverse head and shoulder pattern could be in the making. While that is true, it is not necessarily good news, as the inverse head and shoulder is a bullish reversal pattern (that works well at the bottom of the downtrend). An inverse head and shoulders at the top usually works as a bull trap.

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• A close (as per UTC) below $14,700 (flag/rising wedge support) would mean the rally from the Dec. 22 low of $10,400 has ended. Prices could then breach support at $12,500 (Dec. 30 low) and slide towards $10,400-$10,000.
• In the larger scheme of things, a break below $8,000 (support of the trend line sloping upwards from Sep. 15 low and Nov. 12 low) would be a cause of worry for the bulls.
• Bullish scenario: A rebound from the 50-day MA, followed by a close above $16,000 would increase the odds of an upside break of the rising wedge.