Analyst Scott Melker and Chris Inks took to their latest analysis and discussed Bitcoin’s recent price action. Chris said that over the weekend, it felt like there was an overreaction rather than something major happening.

He explained that if the situation was as critical as people made it out to be, we should have seen a major sell-off when New York markets opened on Monday, but that didn’t happen. Instead, there was a big reversal, indicating that the initial panic was likely overblown.

Chris then discussed a chart that compares Bitcoin to the VIX, showing that Bitcoin tends to react around the same support level whenever the VIX spikes. While it may not be definitive, it suggests that Bitcoin is finding support at a level that has held for nearly a decade.

He also pointed out that, despite the market volatility, there hasn’t been an expansion of volume on the way down, which would typically indicate distribution. Instead, the volume remained steady, and a large spike only occurred when Bitcoin broke down, followed by a swift recovery, which Chris views as a sign that the market may not be as bearish as feared.

Chris shared his alternate count, suggesting that Bitcoin might be in a fourth wave pullback, which has retraced to a typical 38.2% level. He’s looking for a daily close above a key resistance point, which would indicate that the recent drop was not as impactful as it initially seemed and could alleviate concerns about further declines. He also added that Bitcoin’s market structure is still bearish, but a breakout above $70K could shift the structure to a more bullish outlook, potentially targeting $95K.

The analyst then addressed a question, pointing out that typically, when you see huge volume on a breakdown of key support in a range, it indicates that there might be more downside to come. He explained that while a rejection and pullback could occur, it might not necessarily mean lower lows.

The key is to watch for where the pullback lands—if it creates a higher low on lower volume, that would be a bullish sign. He also noted that on such pullbacks, you’re looking for less volume than what was seen during the initial drop, which would confirm that selling pressure is diminishing.