Bitcoin has climbed over 14% from recent lows near $80,600 to challenge the $93,000 level, but the recovery isn’t convincing everyone. A growing number of market analysts are warning that the current rally is a classic bull trap, arguing that these price gains are an opportunity to sell before a potential decline to as low as $40,000.

The Bear Flag Warning

One of the primary arguments for a continued downturn comes from a classic technical pattern known as a bear flag. This structure typically forms during a downtrend when a brief price recovery is followed by another significant move lower. Several analysts have highlighted this bearish continuation pattern on Bitcoin’s chart.

If the pattern resolves as expected, the technical downside target for December is projected to be around $77,100. This figure is calculated by measuring the height of the previous downtrend and applying it from the potential breakdown point, suggesting a dip of approximately 16% from current price levels.

A Repeat of the 2021 Market Cycle?

Some analysts see an unsettling similarity between Bitcoin’s current market structure and the 2021 cycle. This historical comparison, or fractal, points to a repeating pattern that includes a double-top formation, a sharp breakdown to cycle support, and a deceptive rebound that traps bullish investors before a more severe crash.

In 2021, this exact setup preceded a prolonged decline that cut Bitcoin’s value in half. Should history repeat itself, the current price action could be the final stage before a major breakdown. This scenario could see Bitcoin revisiting the $40,000 region in early 2026, a drop of more than 50% from its recent valuation. Other analysts have echoed this target, citing Bitcoin’s retreat from a multiyear ascending trendline that has historically led to major drawdowns.

Sentiment Indicators Flash Red

Beyond technical charts, market sentiment is also raising concerns. Last week, Google searches for the term “Bitcoin bear market” reached their highest level in five years. Historically, such spikes in fear have often appeared just before significant market selloffs.

This pattern was observed in May 2021, just before BTC’s price fell by over 50%, and again in June 2022, as the asset slid toward its cycle bottom. One analyst warned that while Bitcoin could rally toward the $97,000 zone next, it might only serve to trap optimistic investors. He suggested that just when everyone believes the bull run has returned, the bear market will truly begin.

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