Alessio Rastani and Manuel Blay analyse Bitcoin's breakdown and outlook for the rest of 2026
Alessio Rastani interviews Dow Theory analyst Manuel Blay on Bitcoin's recent sharp decline and what it signals for the months ahead.
Summary
Alessio Rastani hosts Manuel Blay of thedowtheory.com to analyse Bitcoin's significant price breakdown, which has taken out prior lows near $60K. Manuel had issued a bullish Dow Theory signal in April, which he now acknowledges was a false signal, noting he had flagged at the time that there was considerable technical damage and resistance overhead. A key warning sign was Ethereum's failure to confirm Bitcoin's higher highs in May — a pattern that also appeared before the major plunge earlier in the year. Both analysts see the current bounce potential as a dead-cat bounce only, with the primary trend remaining bearish, and Manuel identifies the $49,000–$50,000 zone as the next logical downside target.
Key Takeaways
FULL TRANSCRIPT
Introduction and Context
Alessio Rastani: Hello and welcome. In this video I want to talk about what's been happening to the chart of Bitcoin. As we've seen, there has been a lot of volatility and a severe drop in the price of Bitcoin, which has taken out the prior lows near $60K. I'm going to discuss the chart picture overall for Bitcoin this year, and I'm joined by my special guest analyst, Manuel Blay of thedowtheory.com. I'm going to get his view about the chart of Bitcoin as well, which should be quite interesting.
Before I start, some of you are probably wondering why I have not posted a video on YouTube for some time. The reason is I've been extremely busy with a lot of personal matters which I can't discuss right now, but I'll tell you more about that next month in July.
Let's go on to the chart of Bitcoin and bring in Manuel Blay. Manuel, thanks very much indeed for joining me. How are you?
Manuel Blay: I'm fine. I'm very honoured to be your guest.
Alessio Rastani: Very kind of you, I appreciate it. Just to give some context — the last time I had Manuel on was back in April, when he mentioned that a bullish Dow Theory signal had triggered on Bitcoin. And yet Bitcoin and Ethereum could not maintain themselves in an uptrend and they fell. We'll get his view on that in a moment.
The Weekly Chart and the Trend Line Break
But let me first mention that if we look at the weekly chart of Bitcoin, you will see that Bitcoin actually got rejected from its weekly moving averages — specifically the 21-week and the 34-week moving averages. Something I mentioned in the member videos: when price gets rejected from these weekly averages, it is typically a warning sign that something is not quite right.
In the member videos I mentioned that if Bitcoin were to trigger a break below the trend line support at $70,512, that could significantly increase downside risk to new lows. If Bitcoin were to drop down in a sustained way and break that support at $70,500, which is also the trend line support, that could actually mean that Bitcoin is getting ready for a sustained decline — a strong drop and potential risk of retesting the prior low of February, and potentially even taking that level out and falling below $60K.
By breaking the $70,512 level and the trend line, it has increased the likelihood that what we had so far was a corrective rally — potentially an ABC rally up to the resistance region — and now, breaking the support, it likely shows that Bitcoin got rejected from resistance, with the odds and risk increasing for a potential decline to take out the prior February lows.
Manuel Blay on the False Bullish Signal
Manuel, what happened? Usually after a Dow Theory bullish signal there is more follow-through to the upside and a bull market resumes or indeed starts. But the signal that occurred in April of this year appears to have been a false signal. Is that correct?
Manuel Blay: Yes, it was a false signal. And I remember that in that video I said there was a lot of technical damage. So it was a bull signal, but I was skeptical as to whether it would reach really lofty levels. I said that because there was a lot of technical damage and resistance above the breakout levels.
Ethereum as a Leading Confirmation Indicator
Alessio Rastani: You actually made a very interesting point in the member video we just did about Ethereum being a strong confirmation and leading indicator. Could you talk briefly about that?
Manuel Blay: Very briefly — it means that when Bitcoin makes a higher high and Ethereum does not confirm, so Ethereum is not making a higher high, this is a yellow flag. It does not mean a bear market, but it means that the higher high in Bitcoin is suspect.
This happened in May. If you look at the charts, for several days — I think three or four days — Bitcoin continued making higher highs while Ethereum did not. This also happened in January 2026, when many people thought the reaction was the end of the bear market. Bitcoin made a higher high and Ethereum did not, and you know what followed afterwards — the big dive, the big plunge.
It also happened very importantly in October 2025, when Bitcoin made an all-time high and Ethereum did not. Was that a bear market signal? No. But it was another warning sign. And this is precisely the warning sign we got in May this year with Bitcoin. This is why in my latest crypto report on June 1st, I said the bull market was under probation — because if Bitcoin's higher level was not confirmed by Ethereum, then the bull market was suspect. And suspect it was.
To be honest, I was hoping the uptrend would continue. Usually when a Dow Theory bullish signal occurs I was expecting and hoping that the uptrend would continue into the mid-80s and higher levels. I wasn't expecting Bitcoin to break down that trend line support. But when it did, we had no choice but to change our minds.
Alessio Rastani: No questions asked.
Manuel Blay: Exactly. No questions asked.
Weekly and Monthly Chart Analysis
Alessio Rastani: Let's take a look at the chart and dig into it. On the weekly chart we can see that trend line break that occurred on the right-hand side. We've reached the 200-week moving average — that green line on the chart. And on the monthly chart, something interesting to me is that the monthly 50-period moving average has now been reached as well. It doesn't mean it's going to hold those levels — nothing is guaranteed — but it is interesting that those levels of support have now been tested, both the monthly and the weekly 200.
But overall, where do you think Bitcoin may head in the next several weeks and months, assuming we stay below resistance?
Manuel Blay: It could well go down to the $50,000–$49,000 level. Look at that dotted grey line you have there, connecting the July–August 2025 lows. This is a logical support on the chart. This could be the next target.
Alessio Rastani: So just under $50K, around $49K — that's your next potential key level.
Manuel Blay: Yes.
Oversold Conditions and the Dead-Cat Bounce
Alessio Rastani: What about the daily chart? Bitcoin appears quite oversold on several key measurements, and it has also taken out the level just near $60K. Do you think some kind of a bounce is likely in the next several days?
Manuel Blay: It would be a dead-cat bounce. All the oscillators are deeply oversold right now. It's possible. But make no mistake about it — it could be a relief rally, a dead-cat bounce. The trend is bearish. And furthermore, if you couple this with the trend of gold and the trend of the stock market — the trend has not changed, but we see bearishness all around, which means tight liquidity. This is a headwind against Bitcoin.
So we can get a small bounce. Yes, it's normal, it's oversold. But is it a change of trend? No, the trend is bearish. Ethereum is confirming the bearish action, which is itself bearish. And furthermore, if you look at the ratios —
Bitcoin vs. Gold Ratio
Manuel Blay: Bitcoin against gold — gold is falling, but it's falling less than Bitcoin, which is bearish for Bitcoin. If Bitcoin is going to be digital gold, then Bitcoin should be stronger than gold. We can see that Bitcoin is significantly underperforming gold.
Look at the moving average — the green one. I guess it's the 200-day.
Alessio Rastani: Yes, the 200-day. It's sloping downwards.
Manuel Blay: Yes, it's ominous. And this is why, when it was a bull market, I said it was under probation — because this ratio is not good. For Bitcoin to shine, to really be strong, it needs to be stronger than gold. If digital gold — if Bitcoin is going to be the gold of the future — then it must be stronger than gold.
And if we zoom out and take a longer perspective of the ratio, we will see that when Bitcoin in the past was really strong, the ratio was bullish for Bitcoin. When Bitcoin was really strong and making higher highs, the ratio — notably the 200-day moving average, the green line — was trending upwards. And now it's ominous, it's really trending downward. So it means that even though gold has fallen, it has fallen less than Bitcoin. Physical gold is stronger than digital gold. This is not good.
MicroStrategy vs. Bitcoin Ratio
Alessio Rastani: We're now looking at a chart of MicroStrategy divided by Bitcoin. What do you see in this chart? What is it telling you?
Manuel Blay: I see huge bearish action. When the market for crypto and Bitcoin is risk-on, MicroStrategy is the leveraged play. So MicroStrategy tends to outperform Bitcoin, and this is bullish for Bitcoin. When on the other hand the crypto space is risk-off, then Strategy becomes weaker than Bitcoin. In this chart it means the ratio goes under because Bitcoin falls, but falls less than Strategy. And this is bearish for Bitcoin. Yes, I'm falling less, but I am falling — and it means a risk-off environment. This is bearish for Bitcoin.
The ABC Corrective Pattern and the 81K Resistance Level
Alessio Rastani: It's worth mentioning something interesting and important here. This particular rally that we're seeing — if we measure it and then project it from the low, the 100% symmetrical projection lands at the red level, which is $80,960, or approximately $81K. That was a level where Bitcoin held — Bitcoin held this resistance, and also held at the 200-day moving average — and then dropped below support.
So some kind of a larger-degree corrective pattern — a potential A-wave, B-wave, and likely C-wave — into resistance, and then the breaking of support, indicated a continuation of the bear market. I think it's worth mentioning that point because it's always good to learn from these patterns.
Thank you very much, Manuel.