Bitcoin sits at a critical support level; here's the bearish and bullish case

The following technical analysis evaluates whether Bitcoin is bound for a continuation of the bearish trend or a bullish impulse.

Although Brandt does not necessarily believe that this bearish formation is valid, he sees it as a probability that could take Bitcoin down to $3,905.

This bearish signal estimates that the next support level sits around the setup trendline, at $4,900.

Thus, if Bitcoin closes below the 23.6 percent Fibonacci retracement level with enough volume, it could try to test the 9 percent Fib for support.

There is a chance for bitcoin to bounce off current levels.

Bitcoin is currently trading around the bottom of the channel.

If validated, the number of long positions behind Bitcoin could rise to hit the 37,000 orders resistance level.

If the CFGI is indeed signaling a buying opportunity this time, Bitcoin could be bound for a bullish impulse.

The recent price action that Bitcoin went through has taken many investors out of their positions.

Despite the current conditions, it seems like Bitcoin is now preparing to shake out those who are pessimistic about its future.