Bitcoin Tests Critical Support Levels as Technical Indicators Signal Potential Bottom Formation

Bitcoin Faces Worst Monthly Performance Since 2018

Bitcoin is experiencing its most significant November decline since 2018, with the leading cryptocurrency down 20% for the month and trading around $87,500 ^[4]. The drawdown from October's all-time highs has reached up to 36%, marking a sharp reversal from the bullish momentum that characterized much of 2025 ^[4].

Data from CoinGlass confirms that such bearish November performance has been absent from the charts since 2018, the year following the previous bull run peak at $20,000 ^[4]. However, AI-driven simulations suggest the bottom may either be in place or due this week, with projections indicating a slow recovery through year-end ^[4].

Technical Analysis Points to Diverging Scenarios

Bitcoin's current price structure presents conflicting technical signals. The cryptocurrency has consolidated within a bear flag pattern, a setup that typically resolves with continued downside momentum ^[1]. A decisive breakdown below the flag's lower trendline could trigger a measured move toward $77,400 ^[1].

However, on-chain metrics paint a more optimistic picture. The Puell Multiple, which tracks miners' daily revenue against the annual average, has fallen to 0.86, entering the discount zone that historically precedes major rallies ^[3]. At this level, the metric signals undervaluation and suggests the "market is pricing Bitcoin below its fair value," according to CryptoQuant analyst Gaah ^[3].

The last time this indicator reached such low levels was in April 2025 when Bitcoin traded near $75,000, preceding a 50% rally to its previous all-time high of $112,000 in May ^[3].

Liquidity Levels and Short Squeeze Potential

Traders are closely monitoring key liquidity zones around $88,000 to $89,000, where significant short positions are concentrated. Trading resource TheKingfisher noted that "there are a lot of short liquidations for BTC on Binance around $88,253.90, which means the price could get pulled up towards that level" ^[2].

Crypto investor Ted Pillows identified $89,000 as the critical reclaim level, stating: "If BTC reclaims the $89,000 level, upside liquidity will be swept first. If Bitcoin loses the $85,000 level, the downside liquidity will be taken out before a bounce back" ^[2].

MicroStrategy Concerns Add Institutional Pressure

Beyond technical factors, Bitcoin faces potential headwinds from uncertainty surrounding MicroStrategy (MSTR), one of the largest corporate Bitcoin holders. MSCI is reviewing whether to exclude companies whose digital assets account for a majority of their balance sheets, with a decision expected by January 15, 2026 ^[1].

CryptoQuant author GugaOnChain warned that "if MSTR is excluded from indexes such as MSCI, billions in automatic sales of its shares by passive funds would be triggered" ^[1]. JPMorgan echoed these concerns, noting that passive funds tracking MSCI benchmarks could be forced into billions of dollars in equity sales ^[1].

Some analysts have accused JPMorgan of running a "MSTR hit job" to force investors into its own Bitcoin-focused leveraged investment products ^[1]. In response, MicroStrategy stated that even if Bitcoin falls to its average cost basis of around $74,000, it would maintain a 5.9 times asset coverage relative to its convertible debt ^[1].

Potential Rebound Targets

Despite the near-term uncertainty, several indicators suggest Bitcoin may be forming a local bottom. The MVRV Z-Score has dropped to a two-year low at 1.13, approaching levels that historically marked the end of major drawdowns ^[3]. A bull flag pattern, if confirmed, could drive Bitcoin toward a measured target of $96,800, representing a 10.6% gain from current levels ^[3].

However, veteran trader Peter Brandt has cautioned that Bitcoin's recent rebound could be a "dead cat bounce" before another leg downward ^[3], while some analysts warn that a final leverage flush below $80,000 remains possible ^[3].