Bitcoin Price Set for First Yearly ‘Bearish Engulfing Candle’

What are the prospects for a “Santa Claus rally”?

article-image

Nixx Photography/Shutterstock.com modified by Blockworks

share

Bitcoin may not be moving much in terms of price lately, but it could be a lot worse, analysts say ahead of the end of the year. 

The largest digital is also poised for its first-ever bearish engulfing pattern for the year, which occurs when a small up — or green — candlestick precedes a larger down — or red — candlestick that ‘engulfs’ the first. Candlestick price charts display the high and low prices of the token or security for a given period. 

But, given bitcoin’s immaturity as an asset, it is difficult to pull trends from a yearly chart, traders caution. What is relevant, however, is another first — the fact that on a weekly scale, bitcoin has been solidly below its previous cycle highs.

The 2017 market peak in bitcoin on a weekly time frame was about $19,800 and it took about a year to find its eventual cycle low around $3,100 — an 83% drawdown. This time around, bitcoin’s fall from $65,000 to $16,000 represents a 75% decline in a similar period, and it’s now working on its fifth full week below the 2017 cycle top.

Bitcoin needs to hit around $29,000 before the end of 2022 to avoid the bearish engulfing candle on the yearly, a 70% jump.

Breaking back above resistance at $17,400 may be an uphill battle this week, with the upcoming Consumer Price Index report expected Tuesday and the Federal Reserve’s rate decision due Wednesday. The expected 50 basis point interest rate increase, coupled with rising recession fears, paints a gloomy picture for cryptocurrencies and other risk assets in the short term. 

“The world’s most fluid trading vehicle, bitcoin, has gained status in 2022 as a leading indicator and declined in a risk-off environment,” Mike McGlone, senior macro strategist at Bloomberg Intelligence, said in a recent note. “But the crypto may be transitioning toward a high-beta version of gold and US Treasury bonds.” 

Bitcoin’s 260-day volatility is currently about four times greater than gold’s, a significant decline relative to 2018 when bitcoin’s volatility was about ten times greater than gold’s. 

Plus, the risk-off sentiment that already exists in markets has not had as significant an impact on bitcoin as it could have, Hany Rashwan, CEO of 21.co, said during a Monday interview.

“It’s a pretty strong risk-off environment right now, not just in crypto, but across every industry,” Rashwan said. “We’ve been comforted, internally, by the plateauing of the bitcoin price, within a specific band.”  

There could be light at the end of the tunnel, some data suggests, but bitcoin still needs to rally more than 40% in less than three weeks to avoid a bearish engulfing pattern. 

“Bitcoin saw inflows [last week] totaling $17 million, sentiment has been steadily improving since mid-November with inflows since then now totaling $108 million, representing 2.1% of total assets under Management,” CoinShares analysts wrote in the most recent fund flows report.

“This supportive sentiment is in-line with deteriorating sentiment for the US dollar, highlighting their high inverse relationship. Also, short-bitcoin saw outflows for the second consecutive week totalling $3.9 million.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Unlocked by Template (7).png

Research

Union’s improvements upon Tendermint consensus through CometBLS, coupled with ZK proving through Galois, allow for a broadly scalable, cost efficient, and low latency IBC implementation that is feasibly scalable across every existing blockchain, virtual machine and runtime. The implementation offers modular crosschain interoperability without the need for trusted intermediaries.  

article-image

Hal Finney joined the Bitcoin network in its first seven days

article-image

Bill Gates expects that within a decade, humans will no longer be needed “for most things”

article-image

A newly submitted SEC pilot proposal aims to tokenize US equities

article-image

As Schwab plots crypto trading upon “more clarity in the regulatory environment,” Morgan Stanley is reportedly interested too

article-image

Over 50 countries, including 8 of the 10 largest gaming markets, aren’t allowed to access the upcoming crypto game