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Bitcoin’s widely discussed “banana zone” appears to be developing differently this cycle compared to previous bull markets, prompting questions about the next move for the price of Bitcoin.
According to crypto analyst Rekt Capital, the banana zone represents “the parabolic upside phase in each market cycle for Bitcoin, especially whenever price would breach old all-time highs,” but the current cycle has shown a slower progression than anticipated.
Despite recent volatility, Rekt Capital maintained that the current price action of Bitcoin fits within expected parameters of Bitcoin’s cyclical behavior, with pullbacks being a normal part of the parabolic phase.
Current 30% Pullback Consistent with Historical patterns
The recent 30% decline in Bitcoin’s price is what Rekt Capital identifies as “the first price discovery correction in Bitcoin’s price action in this cycle.”
“Across time the banana zone has represented the parabolic upside phase in each market cycle for Bitcoin, especially whenever price would breach old all-time highs,” the analyst explains. “This is effectively the trigger that gets Bitcoin into price discovery and beyond.”
When examining previous cycles, Rekt Capital points out consistency in the magnitude of first price discovery corrections.
The 2017-2016 cycle saw a first correction of 34%, while the 2021 cycle experienced a 31% pullback. Even within the current cycle, a similar 33% correction occurred during the post-halving period.
According to the analysis, Bitcoin usually experiences multiple corrections during its price discovery phase. The 2021 cycle saw three such corrections (31%, 55%, and 25%), while the 2017 cycle underwent four distinct corrective phases.
This suggests that the current pullback may be just the first of several before the cycle concludes.
Technical Indicators Point to Potential Reversal
Several technical indicators suggest Bitcoin may be forming a bottom at current levels, according to Rekt Capital’s analysis.
The clearest signal comes from the formation of a bullish divergence, which is characterized by “lower lows in the price action and higher lows in the RSI,” which has historically preceded meaningful recoveries.
“We started seeing initial signs of a bullish divergence and higher lows on the RSI, lower lows on the price action,” the analyst notes.
This pattern has already begun playing out with Bitcoin recovering from mid-March lows of around $82,000 to approximately $87,000-$88,000 by month-end.
Volume analysis provides additional support for a potential trend change. “Declining sell-side volume” has been observed during the correction, which typically occurs “when we see prolonged sell-side momentum towards the downside” and “sellers simply get exhausted over time.”
Another key technical factor is Bitcoin’s recovery from oversold territory on the Relative Strength Index (RSI).
The analyst points out that “every time we’ve done that we’ve seen price reversals towards the upside, especially if it’s been a v-shaped reversal similar to what we’re seeing here.”
Price of Bitcoin: Levels to Reclaim for Uptrend Continuation
For Bitcoin to resume its upward trajectory and continue the “banana zone” phase, several key price levels must be reclaimed, according to Rekt Capital.
The first critical level identified is $93,500, which would allow the price of Bitcoin to “reclaim and resynchronize with that old reaccumulating range below which we’ve deviated.”
Before reaching that target, however, Bitcoin needs to overcome immediate resistance at the 21-week Exponential Moving Average (EMA).
The significance of reclaiming the $93,500 level extends beyond just price action—it would put Bitcoin back on track to enter what the analyst calls “the second price discovery uptrend.”
This next phase would represent a continuation of the banana zone concept rather than its negation.
