The recent decline in Bitcoin’s price has sparked concerns about whether this level is the local top for BTC. The price dropped by over 11% in just four days after reaching an all-time high above $108,360 on December 17. As a result, investors and traders are left wondering how low Bitcoin can go over the next few days.
A Historical Analysis
To better understand the current market trend, let’s examine the historical data from December 2023 to January 2024. During this period, the BTC/USD trading pair exhibited a rounded accumulation pattern, consolidating within a rectangular range of $39,000-$46,000. After a brief correction following a local high, Bitcoin broke out of the range and rallied sharply to $66,000 by March 2024.
Current Market Trend
The current price action demonstrates similar characteristics, with Bitcoin consolidating between $88,000 and $102,000. As of December 20, BTC price is 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 towards $88,000 in December, only to rebound towards the $102,000 resistance and beyond thereafter.
Potential Breakout Target
Popular trader Follis has suggested that if this pattern plays out, the breakout target could be as high as $120,000. This would be a significant milestone for Bitcoin, marking a new all-time high.
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However, a Bitcoin fractal on a weekly timeframe indicates that a broader price correction could be in play. BTC’s price now exhibits signs of bearish divergence, reminiscent of its 2021 market top. The divergence is highlighted by the relative strength index (RSI) forming lower highs despite BTC/USD reaching higher highs, signaling weakening bullish momentum and a potential price correction ahead.
The 2021 Bearish Divergence
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 Supports 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.
Potential Breakout from Ascending Triangle Support
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 Confirmed Breakout
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
The recent price decline has raised concerns about whether this is the local top for BTC. However, historical analysis suggests that Bitcoin may initially dip towards $88,000 in December, only to rebound towards the $102,000 resistance and beyond thereafter. The key supports to watch lie at the 50-week EMA and the 0.786 Fibonacci retracement level.
Disclaimer
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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