When technical analysis becomes the main driving force, how do Bitcoin investors navigate the cycles?

As of February 27, 2026, the crypto market is in a delicate phase dominated by technical analysis (TA) rather than fundamental narratives. According to Gate market data, Bitcoin (BTC) is currently trading within a narrow range of $68,200 to $68,500, retracing over 45% from its all-time high of $126,000 in October 2025. Market sentiment indicators, such as the fear and greed index, have lingered in the “extreme fear” zone between 11 and 16 for an extended period, a range historically associated with market bottoms.

Recently, AllianceDAO co-founder Qiao Wang’s viewpoint has sparked widespread discussion in the industry: Bitcoin, as an asset without cash flow backing, does not primarily move in response to external macro events. Instead, its price fluctuations are driven by technical analysis, which fundamentally reflects collective psychology. This insight directly addresses the core contradiction in the current market—when the traditional “four-year halving cycle” narrative temporarily fails, investors are trying to find a way out of the maze composed of charts, key price levels, and sentiment to reach the next trend.

Evolution of Pricing Logic and a Retrospective Timeline

To understand why technical analysis currently dominates, it’s necessary to trace the evolution of pricing logic throughout this cycle:

• Early 2024 to Q3 2025: Macro and institutional pricing phase. The approval of US spot ETFs brought unprecedented inflows of institutional capital, causing Bitcoin’s price to correlate strongly with global M2 money supply and the Nasdaq index, reaching historical highs in correlation. At this stage, macro liquidity expectations and institutional allocation needs were the main drivers of price.
• Q4 2025: External shocks and narrative breakdown. The “Wash Shock” (triggered by the new Fed chair candidate’s hawkish policy expectations) raised concerns about tightening macro liquidity, compounded by a tech stock correction, causing Bitcoin to plummet from its high of $126,000. The traditional expectation of a “violent bull run” after halving was shattered, and supporters of the four-year cycle began to waver.
• Early 2026 to present: Price control returns to charts. When macro narratives become chaotic—interest rate cut expectations fluctuate, trade policies remain uncertain—and without heavyweight catalysts like ETF approvals, the market enters a “narrative vacuum.” At this point, price action itself becomes the most important source of information. As Qiao Wang states, after a trend is broken, investors take profits or cut losses based on technical patterns, and technical analysis and collective psychology start to dominate daily price movements.

Data and Structural Analysis: The Battle of Key Price Levels

The current market structure is supported by several key data points, which together form the physical basis for the role of technical analysis.

First, the “physical bottom” defined by miner economics. According to earlier Gate research, Bitcoin network mining difficulty experienced its largest adjustment since 2021 in February—about an 11.16% decrease—indicating that many high-cost miners have begun to capitulate. Data shows that the shutdown price range for the new generation Antminer S21 series at an electricity cost of $0.08/kWh is approximately $69,000 to $74,000. The current price has pierced this range, implying some marginal hash power is exiting. The more extreme physical bottom is supported by the latest S23 series miners, with a cost basis near $44,000, forming a clear gradient of support levels.

Second, the derivatives market reveals the “line of life and death.” Gamma distribution in options markets shows that $60,000 is a critical area of negative gamma concentration. This means that if the price effectively falls below this level, it could trigger hedging sell-offs by market makers, creating a self-reinforcing cycle of “downward → selling → further decline,” leading to a true capitulation sell-off. Conversely, the $85,000 to $90,000 range is a positive gamma concentration zone, forming a short- to medium-term “bull limit.” Currently, the price is oscillating narrowly between the “life and death line” at $60,000 and the psychological resistance at $70,000–$75,000.

Sentiment and Perspective Breakdown: Signs and Timing of Capitulation

Regarding whether “total capitulation” has already occurred or is imminent, market sentiment shows clear divergence:

• One camp believes capitulation is underway. Evidence includes the fear and greed index reaching historic lows and a significant decline in network hash rate, indicating miners—marginal producers—are leaving. On-chain data shows realized profit/loss ratio has fallen below 1 for the first time since 2023, often seen as a sign of approaching structural bottom. They argue that a trend reversal does not necessarily require a macro catalyst; once selling pressure exhausts, the market will naturally turn.
• The other camp believes capitulation has not yet fully occurred. They argue that a true bottom requires more extreme panic signals, such as sustained large-scale ETF outflows (which have stabilized temporarily) or a rapid plunge below $60,000 with high volume, thoroughly clearing excessive leverage. Historically, bear markets last about 14 months; since the high in 2025, only over four months have passed, so the bottoming process may still be incomplete.

Scrutinizing Narrative Authenticity: Is Technical Analysis the Cause or the Result?

In the narrative that “technical analysis dominates pricing,” we must examine its authenticity. Simply attributing price movements to technical analysis may confuse cause and effect.

Factually, prices do indeed follow patterns like “death crosses” and key support/resistance levels. However, attributing Bitcoin’s bear market solely to “technical analysis” or “chart patterns” is akin to blaming a flood on the river’s bends. A more reasonable hypothesis is that technical analysis is a shared language and self-fulfilling tool used by market participants during macro narrative vacuum periods.

When many traders focus on the $60,000 support and the 200-week moving average, these levels naturally become battlegrounds. Therefore, rather than technical analysis being the primary driver, it’s more accurate to say that, in the absence of stronger external forces, market participants collectively rely on this language to coordinate expectations and manage risks. The narrative itself is real, but it is a surface reflection of deeper strategic battles, not the root cause.

Industry Impact Analysis: Features of a New Pricing Era

If the current dominance of technical analysis in pricing persists, it will have profound structural effects on the industry:

1. Changes in volatility characteristics: During macro and institutional phases, volatility is driven by liquidity expectations, with trend persistence. In TA-dominated phases, markets are more prone to range-bound oscillations, with increased frequency of false breakouts and sharp declines, driven by liquidations and stop-loss triggers.
2. Reshaping trader composition: Passive investors relying on “buy-and-hold” narratives will face greater psychological stress and unrealized gains/losses. Conversely, active traders skilled in technical analysis and swing trading may see relatively higher returns, potentially increasing short-term speculative behavior.
3. Increased dependence on catalysts: Markets will eagerly await macroeconomic data or industry events (e.g., Fed signals of rate cuts, regulatory breakthroughs) that can break the deadlock, as only external shocks can free the market from the current internal strategic stalemate.

Multi-Scenario Evolution and Projection

Based on current facts, several future evolution paths can be envisioned:

Scenario 1: Range-bound bottoming, time for space (higher probability)

• Trigger: No major macro deterioration; ETF fund flows remain balanced.
• Path: Price oscillates within a broad range of $60,000 to $75,000 over the next 1–3 months. Repeated chip exchanges gradually digest the trapped positions above $70,000. A false breakdown below $60,000 followed by quick recovery signals a capitulation. In this scenario, investors might adopt grid trading strategies or dollar-cost averaging.

Scenario 2: Double bottom with volume capitulation (risk scenario)

• Trigger: New macro liquidity tightening signals or a deep correction in US stocks, breaking below $60,000 support.
• Path: Rapid decline to $52,000–$58,000, near miner cost support zones. During this process, leverage is heavily liquidated, volume surges, and panic ensues. This would be the most likely “ultimate capitulation” in this cycle. Long-term investors could see this as the best risk-reward entry point.

Scenario 3: Sudden catalyst-driven V-shaped reversal (low probability, high impact)

• Trigger: Unexpected dovish signals from the Fed or major positive news such as sovereign adoption.
• Path: Price quickly breaks through $75,000 resistance, filling gaps and rallying sharply. In this case, the “total capitulation” phase may be skipped. Investors should monitor price action relative to long-term trend lines like the 200-day moving average for confirmation of a trend reversal.