Widely followed crypto analyst Doctor Profit says bitcoin is currently forming a bearish flag pattern, a signal that could point to further downside.

Bitcoin is already facing several headwinds, including a hawkish Federal Reserve, rising bond yields, and ongoing concerns around Strategy (MSTR). The emergence of a negative technical setup is adding to the uncertainty.

The formation — known as a bear flag — suggests continuation to the downside if confirmed. According to the pseudonymous trader, who previously identified bitcoin’s $126,000 market top and the subsequent correction, a breakdown could initially drive prices toward $54,000.

“Bitcoin is forming a large bearish flag on the daily timeframe,” Doctor Profit wrote on X. “I’m targeting a move into the $54K–$56K range first, followed by consolidation, and then another leg lower, with a potential bottom forming between $40K and $50K.”

On a chart, the pattern resembles an inverted flag. It begins with a sharp decline (the flagpole), followed by a temporary rebound (the flag). A break below the lower boundary typically triggers a continuation move roughly equal to the initial drop.

In this case, the analyst highlights bitcoin’s decline from its May peak near $82,000 to below $60,000 by early June as the flagpole, while the recent recovery toward $68,000 forms the flag.

That said, technical analysis is not definitive. Different analysts may interpret the same chart differently, and while bear flags often resolve lower, they can also fail, leading to a potential upside reversal.

Still, recent options market activity aligns with a cautious outlook. Traders have been accumulating put options, suggesting expectations for a near-term move toward $52,000.