Will the Bitcoin Price Plummet to Historic Lows?
Bitcoin Price Plummets by Over 11% in Four Days
The price of Bitcoin (BTC) has taken a significant hit, declining by more than 11% over the last four days after reaching an all-time high above $108,360 on December 17. This substantial drop has sparked concerns among investors and traders about whether this level is the local top for BTC price and what could happen in the next few days.
Is the Local Top Reached?
As Bitcoin’s price declined, questions arose regarding the potential for a more significant correction or even a new low. Some analysts have pointed out that the current price action resembles a rounded accumulation pattern seen between December 2023 and January 2024. During this period, the BTC/USD trading pair consolidated within a rectangular range ($39,000–$46,000) before breaking out to reach $66,000 by March 2024.
Historical Pattern Repeats Itself
A closer look at the chart reveals that the current price action is similar to the previous accumulation pattern. As of December 20, BTC’s price could be undergoing a correction toward the channel’s lower boundary zone defined by the $88,000–$90,000 range. If history repeats itself, Bitcoin may initially dip toward $88,000 in December, only to rebound toward the $102,000 resistance and beyond thereafter.
Popular Trader Follis Weighs In
Popular trader Follis has expressed his opinion on this matter, stating that $120,000 is the breakout target if this pattern repeats. While some analysts are optimistic about Bitcoin’s future price movements, others remain cautious, warning of a potential 30% crash similar to the one seen in November 2021.
A Broader Price Correction Ahead?
A closer examination of the weekly timeframe reveals that BTC’s price exhibits signs of bearish divergence, reminiscent of its 2021 market top. The relative strength index (RSI) is forming lower highs despite BTC/USD reaching higher highs, signaling weakening bullish momentum and a potential price correction ahead.
A Historical Precedent
The 2021 bearish divergence preceded a significant drop from Bitcoin’s then-all-time high near $69,000, with the price eventually bottoming near $15,000 in late 2022. A similar divergence appears now as BTC failed to maintain its position above $100,000.
Key Support Levels to Watch
On longer time frames, the key support to watch lies at the 50-week EMA, which will be around $66,600 by January 2025. If that fails to hold, the next support is at $57,000, which is the 0.786 Fibonacci retracement level.
Is the Local Bottom Around $97K?
If Bitcoin successfully breaks out from the ascending triangle support near $97,000 visible in the chart, it could mean the cryptocurrency is already bottoming out. The triangle’s horizontal resistance near $102,000 and ascending trendline support around $97,000 indicate buyers are maintaining higher lows, a sign of underlying strength.
A Potential Breakout Above $102K
A confirmed breakout from the triangle projects an upside target near $114,650, measured by adding the triangle’s height (~$12,000) to the breakout level. Such a move would invalidate the immediate bearish divergence narrative and reassert bullish momentum.
Conclusion
In conclusion, while Bitcoin’s price has declined significantly over the last four days, it remains uncertain whether this is a temporary correction or a more significant downturn. As always, investors and traders should conduct their own research and consult with financial experts before making any investment decisions.
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