Bitcoin is once again tracing a familiar structure: a sharp shakeout, sentiment collapse, and rapid recovery setup that has marked several major rallies in past cycles.
The latest 19% decline has placed BTC in the same technical pocket seen before the 13% shakeout of mid-2024 and the 17% flush in early 2025. Each previous instance cleared leveraged traders, reset positioning, and prepared the market for an aggressive upside reversal.
The chart shared by MerlijnTrader presents the clearest visual of this repeating structure. BTC first breaks down aggressively, sentiment flips to extreme fear, and leveraged longs unwind. Once that pressure finishes, Bitcoin typically forms a clean reversal and grinds back toward previous highs before launching into a fresh breakout phase.
A Shakeout That Matches Previous Cycles
The current move carries the same hallmarks. The 19% drawdown mirrors the two earlier “box” patterns highlighted on the weekly chart. Price sharply rejected the same horizontal support that held during earlier corrections before snapping back. These recurring dips have consistently appeared just before BTC attempts a renewed push toward the cycle’s peak.
What stands out this time is how retail positioning follows the same rhythm. In previous shakeouts, the indicator tracking long positions shows a surge into a red “excessive longs” zone, followed by immediate unwinds. Once the positioning resets, buyers historically step back in. The latest dip shows this exact behavior repeating, suggesting that the broader structure is intact.
Sentiment Hits Extreme Fear
A core part of the shakeout setup is the emotional swing. As BTC sold off, sentiment dramatically shifted into extreme fear, a pattern identical to what happened before the last two reversals. Retail capitulation is visible in the momentum indicators shown on the lower panel of the chart, where each dip into the reset zone preceded notable recoveries.
When extreme fear collides with technical support, Bitcoin often builds the conditions for a violent upside break. The current chart shows the early stages forming again, with higher-time-frame support still intact despite the dramatic pullback.
Is History Repeating Again?
Across the chart, each green arrow marks the start of recovery phases that ended in higher highs. With the latest dump already showing early signs of stabilizing, traders are beginning to question whether Bitcoin is preparing to follow the same path once more.
The structure suggests the classic three-step pattern:
- •A sharp liquidation-driven dump
- •Sentiment collapsing to washed-out levels
- •A reversal that catches the market off-guard
That final leg is the pattern Bitcoin has repeated several times in this cycle. With the 19% decline fitting perfectly inside this framework, the possibility of a larger breakout is now back on the radar.
Whether BTC will follow the same script cannot be predicted with certainty — but the technical rhythm, sentiment washout, and structural alignment make this one of the more compelling setups of the current market.