Bitcoin continues to decline, and the current movement could develop into a full-scale new phase of the downward trend that began last year. Over the past few weeks, Bitcoin has lost approximately $11,000 in value. At present, this movement is considered corrective, although Bitcoin is showing increasingly persistent downward momentum. It should be noted that the possibility of the downward trend having ended cannot be ruled out. However, the reasons for a new bullish trend remain unclear and debatable.

Bitcoin's latest three-month rally was essentially a move from the lower boundary of the sideways channel to its upper boundary on the daily timeframe, following the formation of a deviation below the lower boundary and subsequently a deviation above the upper boundary. The deviation above the upper boundary was substantial, but if it was indeed a deviation, Bitcoin is now likely heading toward the $70,800 level. The digital asset has firmly returned to the sideways channel, making a move toward its 50% level a highly logical and expected development.

The latest decline in Bitcoin and the broader cryptocurrency market was triggered by the preliminary results of the US congressional elections, which became available overnight. It should be recalled that the US congressional elections, regardless of their outcome, were identified as a risk factor for Bitcoin. This is because Bitcoin has experienced significant declines following midterm elections over the past 12 years. This is a historical pattern, although it is not necessarily destined to repeat itself every four years. However, this is far from the only factor weighing on digital assets.

The Democrats are highly likely to win the elections. Even if they fail to gain control of the Senate, securing a majority in the House of Representatives would be sufficient to make it more difficult for Donald Trump to advance his agenda. Even Republican senators voted against the controversial Clarity Act bill. The more seats the Democrats win in Congress, the more of Trump's initiatives they are likely to try to block. If Trump supports the development of the cryptocurrency sector in the United States, the Democrats are likely to oppose it. Similarly, if Trump fully supports the development of artificial intelligence, the Democrats are likely to seek to restrict it and introduce stricter regulatory requirements.

Overall BTC/USD Outlook on the Daily Chart

On the daily timeframe, the bearish trend structure has been broken. Therefore, the digital asset has most likely officially begun forming a new bullish trend. The price reached the bearish FVG from the previous trend and reacted to this pattern, triggering the expected correction.

However, the breakout beyond the 60,000–82,500 sideways channels in September may still prove to be a deviation. Combined with the reaction to the bearish FVG, this could trigger a decline toward the lower boundary of the sideways channel. Another sell signal has formed within the latest bearish FVG. In addition, bearish Order Blocks and FVGs have formed, also pointing downward and potentially generating further sell signals.

Overall BTC/USD Outlook on the 4-Hour Chart

Bitcoin attempted to establish a new upward trend, but the fundamental background, spot demand, and recent news remain too weak to support expectations of its continuation. In the near term, Bitcoin may continue declining on the daily timeframe, as the price has reacted to the two latest bearish FVGs and formed a bearish Order Block.

The breakout beyond the sideways channel on the daily chart is currently interpreted as a deviation. Thus, Bitcoin has generated a reversal signal and is heading toward the $70,800 level. Since a sideways market does not necessarily indicate that the prevailing trend has ended, the bearish trend is not considered complete. Short positions remain the most relevant trading option in the near term.

Explanation of the Illustrations

CHOCH – Change of Character; a break in the existing trend structure.

Liquidity – Liquidity represented by Stop Loss orders and pending orders that market makers use to build their positions.

FVG – Fair Value Gap; an area of price inefficiency. Price moves through such areas very quickly, indicating a complete absence of one side of the market. Subsequently, price tends to return to these areas and react to them in the direction of the prevailing trend.

IFVG – Inverted Fair Value Gap; when price returns to such an area, it does not react to it but instead breaks through it impulsively and then retests it from the opposite side.

OB – Order Block; a candle at which a market maker opened a position to collect liquidity and build a position in the opposite direction.