Is It Time To Sell? Bitcoin Price Enters Redistribution Phase That Previously Led To A 78% Crash

A warning from Bitcoin’s weekly chart is showing a familiar bear market structure beginning to take shape. According to technical analysis of the weekly chart, Bitcoin has already moved through a topside distribution phase and a range phase beneath it, and the current price action is now forming a redistribution zone. 

The concern is that a similar setup appeared after the 2021 peak before Bitcoin went through a much deeper decline. The last time this setup appeared, it erased nearly 80% of Bitcoin’s value in under a year.

Bitcoin Chart Following The 2021 Breakdown Structure

The analysis compares Bitcoin’s current weekly chart with the structure that developed during the 2021 to 2022 bear market. In that previous cycle, Bitcoin first created a distribution zone near the top. The price then entered a range phase below that high, creating the appearance of stabilization before the market rolled into a redistribution area.

The first stage in 2021, which was a Distribution Phase, occurred as Bitcoin reached its then-peak near $69,000. In the current cycle, the same pattern materialized around the $108,000 to $126,000 zone, forming a wide but delineated top. The second stage was a Range Phase, which is a minor consolidation band directly beneath the distribution ceiling where price stabilized before the next move. 

The third stage, and the one that might be forming right now, is Redistribution. This is the structure that immediately preceded the 2021 crash. It is a secondary range, lower than the first, where sellers reassert control before a decisive breakdown. In 2021, the conclusion of this redistribution phase was the last exit point before the Bitcoin price fell 78% over the following eight months.

Bitcoin Weekly Price Chart. Source: @degargoyle On X

Is This A Sell Signal?

The question now is whether this is a sell signal, but the chart does not give a simple answer. What it does show is a warning against assuming that the recent bounce above $80,000 is the to a new all-time high. At the time of writing, Bitcoin is trading at $79,800. The redistribution phase, if confirmed, does not guarantee a crash of 78% or any fixed magnitude. But a repeat of a 78% crash from current price levels will see the Bitcoin price falling below $25,000.