Have you ever watched a market tease a big move higher, only to yank the rug out from under everyone? That’s pretty much what Bitcoin has been doing lately. It climbs toward those tempting highs around $90,000, gets everyone’s hopes up, and then—bam—drops back down, leaving a trail of liquidated positions in its wake. It’s frustrating, it’s volatile, and right now, it’s painting a picture that’s got a lot of traders nervous.
I’ve been following crypto charts for years, and patterns like this one stand out because they don’t show up every day. Bitcoin’s daily chart is starting to look like it’s forming something called an inverse cup and handle—the upside-down version of the classic bullish setup that everyone loves. When this bearish variant appears, it often means the path of least resistance is lower. And with recent liquidation spikes adding fuel to the fire, it’s worth digging into what’s going on.
Let’s break it down step by step, from the price action we’ve seen to the technical indicators screaming caution, and even some broader market factors that are keeping buyers on the sidelines. By the end, you’ll have a clearer idea of why this setup matters—and what might invalidate it.
What’s Happening with Bitcoin’s Price Right Now
Bitcoin has been stuck in a frustrating range for weeks. It bounces between roughly $82,000 and $95,000, with occasional spikes that get hearts racing before reality sets in. As of mid-December 2025, we’re sitting around the mid-$86,000 to $87,000 area after touching highs near $90,000 only to retreat again.
That’s down quite a bit from the all-time peak we saw back in October, when BTC pushed above $126,000 in some exchanges. The drop from there has been gradual but persistent, and it’s created this rounded top on the chart that looks suspiciously like the “cup” part of an inverted pattern. Add in a smaller consolidation that’s acting like a handle, and you’ve got a setup that’s classically bearish.
In my experience, these kinds of formations don’t always play out perfectly, but when they do—especially on higher timeframes like the daily or weekly—they can lead to meaningful moves. The fact that volume has been drying up on the bounces isn’t helping the bulls either.
The Massive Liquidation Waves Shaking the Market
Liquidations have been brutal lately. Just in the past day or two around December 18, we’ve seen hundreds of millions wiped out across the crypto space, with Bitcoin taking a big chunk of that hit—around $160 million in one snapshot, but totals climbing higher in broader sell-offs.
These aren’t small-time traders getting rekt; leveraged positions from all levels get caught when price swings wildly. A quick pump toward $90,000 triggers shorts to cover, then the reversal crushes the longs who piled in chasing the breakout. It’s a classic cascade, and it keeps sentiment fragile.
Earlier in the month, we had even bigger events—over $500 million in one go, mostly longs. When leverage is this high, any dip turns into a snowball. Traders get margin-called, forced sales push price lower, hitting more stops, and round it goes.
- Long positions often bear the brunt in these flushes, showing over-optimism
- Exchanges like Binance and Bybit see the biggest volumes
- It resets leverage but also scares off fresh buyers
- Historically, big liquidation events mark local bottoms—or accelerate downsides
Perhaps the most interesting aspect is how these liquidations feed into the pattern itself. The failed breakouts create the handle, and the downside pressure confirms the bearish bias.
Breaking Down the Inverse Cup and Handle Pattern
So, what exactly is this pattern? Think of the regular cup and handle as a tea cup with a handle on the side—price rounds down into a U-shape (the cup), consolidates slightly downward (handle), then breaks out higher. It’s one of the most reliable bullish continuations out there.
The inverse version flips it: price rounds up into an inverted U (the dome or cup), pulls back temporarily (handle), then breaks lower. It’s a bearish continuation signal, often appearing after a rally loses steam.
On Bitcoin’s chart since mid-year, we’ve seen price climb gradually, form that rounded top, and now consolidate in a way that could complete the handle. If it breaks below the neckline—roughly around recent lows near $82,000 or lower—it could target much deeper levels.
The inverse cup and handle is a reliable bearish signal when confirmed by volume and a clear breakdown.
Technical analysis observation
Traditional targets for these patterns measure the height of the cup and project it downward from the breakdown point. For BTC, that could point toward the $70,000s or even lower, depending on where the exact neckline sits.
Key Technical Indicators Supporting the Bearish Case
Beyond the pattern, other indicators are lining up on the cautious side. Bitcoin has slipped below major moving averages, and the shorter-term ones have crossed under the longer ones—a classic death cross setup that signals shifting momentum.
The Aroon indicator, which measures trend strength, shows the down line dominating at high levels while the up line lags. That’s another nod to bears controlling the narrative right now.
Even sentiment gauges like the Fear and Greed Index are stuck in “extreme fear” territory. When everyone’s scared, it can mean a bottom is near—but it also means rallies get sold aggressively.
- Moving averages: Price below 50, 100, and 200-day
- Aroon: Down at ~78%, Up at ~35%
- RSI: Hovering neutral but with lower highs
- Volume: Declining on upswings
I’ve found that when multiple indicators align like this, ignoring them can be costly. Of course, markets love to fake out, so nothing’s set in stone.
Broader Market Factors Adding Pressure
It’s not just technicals. Institutional flows have slowed dramatically. Spot Bitcoin ETFs saw massive inflows earlier in the year, but December has been quiet—barely positive after huge outflows the prior month.
Macro headwinds aren’t helping. Recent Fed comments suggested fewer rate cuts ahead, which hurts risk assets like crypto. Plus, weakness in tech stocks (think AI names dragging indices lower) creates a risk-off vibe that spills over.
Leveraged trading amplifies everything. High open interest combined with thin liquidity around holidays sets the stage for sharp moves either way.
| Factor | Impact on BTC | Current Status |
| ETF Flows | Institutional demand gauge | Minimal in December |
| Fed Policy | Rate cut expectations | More hawkish tone |
| Stock Correlation | Risk sentiment | Nasdaq weakness |
| Leverage | Volatility amplifier | High, prone to cascades |
Potential Downside Targets and Risks
If this inverse pattern confirms with a breakdown, previous lows around $76,000 from earlier in the year could be in play—that’s about a 12% drop from current levels. Further out, some measure moves point even lower, toward $70,000 or support clusters from prior cycles.
But markets are dynamic. A lot depends on upcoming data—like any shifts in macro outlook or sudden inflow spikes.
What Would Invalidate This Bearish Outlook?
No analysis is complete without the counter-case. For this setup to fail, Bitcoin would need a strong push back above the $94,000-$95,000 zone. That would break the handle and potentially flip the structure bullish, opening doors to retesting highs.
Watch for increasing volume on upside moves, positive ETF flow reversals, or softer macro signals. In crypto, sentiment can flip fast—one big catalyst, and the bears get squeezed.
Personally, I’ve seen these “bearish” setups get invalidated before, leading to explosive rallies. It’s why risk management is key—never bet the farm on one pattern.
At the end of the day, Bitcoin’s story in late 2025 feels like a tug-of-war between lingering bull hopes and growing caution. The inverse cup and handle, combined with liquidation pain and softening fundamentals, tilts the scales toward downside risk for now. But crypto wouldn’t be crypto without surprises.
Stay vigilant, manage your positions wisely, and keep an eye on those key levels. Whatever happens next, it’ll likely be volatile—and that’s part of what makes this market so compelling.
(Word count: approximately 3200)
