Bitcoin’s BTC daily chart has produced three consecutive red candles for the first time since the lead-up period to Donald Trump’s US election victory in November. This coincidental timing has analysts drawing parallels with a previous occurrence where Bitcoin retraced significant lows during the same period. Another notable similarity between these two instances was Bitcoin’s retesting of the 50-day Exponential Moving Average (EMA) level, signaling potential support and momentum reversal.
On the Bitcoin 1-day chart, BTC has been consolidating around key resistance levels while showing signs of weakness following a significant price decline. Analysts have pointed to bearish divergence between Bitcoin’s price action and its Relative Strength Index (RSI), a technical indicator that measures the speed and magnitude of an asset’s momentum. Such divergence often precedes further corrections or sell-offs, with historical patterns suggesting a potential retracement of 8-10% from current levels.
Bitcoin correction is ‘almost done,’ says analyst Captain Faibik, an independent crypto trader based in Switzerland. In a recent post on X.com, Faibik highlighted that the current price decline is driven by a massive bearish divergence between Bitcoin’s price and its RSI over the past month. He explained that such divergences are often followed by significant corrections, with historical data showing that these retracements are typically healthy resets that provide clarity and direction for the market.
According to Faibik’s analysis on the Bitcoin 1-day chart, the price is expected to bounce back from the $94,000 range. This expectation is supported by visual indicators such as candlestick patterns and support levels, which act as potential pivots for price action. However, another anonymous crypto trader, referred to only as "Cold Blooded Shiller," has expressed a more pessimistic outlook. Based on the same divergence pattern observed in Bitcoin’s price action, Shiller predicts a deeper pullback, suggesting that a similar sell-off could extend down to as low as $85,000.
Furthermore, a futures market analyst noted that spot Bitcoin holders are experiencing intense selling pressure, disconnecting from the broader derivatives market. This disconnection is attributed to significant short positions in Bitcoin, with the price dropping significantly due to bearish sentiment and reduced leverage demand. The analyst highlighted that this is one of the most notable selling activities by Coinbase since Bitcoin peaked at around $66,000 in late 2021.
Maartunn, a CryptoQuant analyst based in Estonia, emphasized that the current selling pressure on Bitcoin is relentless, with realized positions surpassing historical norms. He pointed to the growing imbalance between long and short positions as a precursor to further declines, suggesting that a bearish trend could intensify unless strong support levels are pierced.
In addition to these technical analyses, the Bitcoin price action has also been influenced by macroeconomic factors and market sentiment. The ongoing US dollar rally, coupled with the global economic slowdown, has contributed to a broader sell-off across asset classes, fueling Bitcoin’s price decline. However, analysts argue that Bitcoin remains resilient due to its unique characteristics as a store of value and hedge against inflation.
The recent spike in Bitcoin’s price action above the crucial $90,000 level has been met with mixed reactions from market participants. While some traders view this as a sign of strength and potential for recovery, others remain cautious, waiting for clearer signs of direction before committing to further positions. The overall sentiment remains bullish among long-term investors, but short-term traders are divided on whether Bitcoin is at risk of another significant correction.
Looking ahead, the next critical resistance level for Bitcoin is expected to be around $100,000. Traders and analysts will closely monitor this level as a potential pivot point where price action could shift from bearish to bullish or vice versa. The outcome of this upcoming test will be crucial in determining the direction of Bitcoin’s price over the coming weeks.
In conclusion, Bitcoin is facing significant headwinds that could lead to further declines unless strong support levels are pierced. However, the resilience of its underlying fundamentals and institutional adoption remain key factors that may drive a reversal of the current trend. For those looking to trade Bitcoin, staying informed about market developments and technical indicators will be essential in navigating this volatile environment.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please conduct your own research or consult a financial advisor before making any trading decisions.