Bitcoin News (December 21, 2024) – How Bitcoin’s Recent Sell-Off Compares to Previous Market Cycles
Bitcoin News (December 21, 2024) – Bitcoin’s (BTC) price has fallen by more than 15% from its all-time high, marking its first series of three consecutive red candles on the daily chart since the early days of November. This pattern mirrors a similar movement observed before Donald Trump’s US election victory. The digital currency is now experiencing increased selling pressure, leading to significant discussions about the potential for a bottoming out in its price.
Bitcoin’s Recent Price Action: Key Observations
As of December 20, Bitcoin’s price dropped below $93,000, a significant milestone in its recent correction phase. This price action has captured the attention of several market analysts, with some speculating that BTC’s correction may be near its conclusion. A noteworthy observation is that Bitcoin has once again retested the 50-day Exponential Moving Average (EMA), a key level where the cryptocurrency has previously experienced price reversals.
This correction has been largely attributed to a bearish divergence between BTC’s price and its relative strength index (RSI), which has been developing over the past month. Captain Faibik, an independent crypto trader, suggested that such divergences often result in an 8% to 10% drop, considered a “healthy reset” for the market. Faibik highlighted that a potential price bounce is expected from the $94,000 range, as shown in his analysis.
Analyst Forecasts: Potential for Deeper Pullback
However, not all analysts share the same optimism. Cold Blooded Shiller, an anonymous crypto trader, is taking a more cautious approach, anticipating a deeper pullback for Bitcoin. Based on the current price action and previous patterns, Shiller warned that if Bitcoin’s recent behavior mirrors January 2024’s downturn, a sell-off could drive the price down to as low as $85,000.
In a contrasting analysis, Byzantine General, a futures market analyst, pointed to the growing selling activity among spot holders. According to Byzantine, the persistent selling pressure has caused a disconnect between the spot market and derivatives market, resulting in a perpetual premium that reflects the intense market dynamics.
Coinbase Selling Activity and Realized Losses Surge
Another critical factor contributing to Bitcoin’s current market turmoil is the rising selling activity on exchanges, particularly Coinbase. According to Maartunn, a CryptoQuant analyst, the selling volume on Coinbase has reached its highest levels since Bitcoin’s price was at $66,000. This relentless selling pressure has intensified, with the Coinbase premium dropping to a quarterly low.
In addition to increased selling, realized losses for BTC have also surged, highlighting growing investor concern. Axel Adler Jr, an on-chain analyst, reported that realized losses reached an alarming $28.9 million over just the past five days. This represents a 320% increase from the weekly average of 2024, signaling heightened market stress. Only 10 instances this year have seen such significant realized losses.
Bitcoin’s Short-Term Outlook: Bearish Break or Recovery?
Despite the ongoing pressure, Bitcoin’s price action has shown signs of potential recovery. According to Axel Adler Jr, a bearish break of structure (BOS) has been observed on Bitcoin’s mid-term chart, but a recovery above $95,000 would invalidate the bearish sentiment. This would indicate that the correction may have run its course, and further downside risks could be limited.
The 4-hour candles have shown signs of recovery, with Bitcoin bouncing back from $92,777 to reclaim the $95,000 range. For a more definitive recovery, analysts suggest that Bitcoin needs to close a daily candle above $95,000, which would confirm that the bearish momentum has faded.
Conclusion: What’s Next for Bitcoin?
As Bitcoin’s price struggles to maintain momentum, the cryptocurrency market is watching closely for any signs of stabilization. With significant realized losses, high selling pressure, and conflicting analyst opinions, the outlook for Bitcoin remains uncertain in the short term.
Despite the pessimistic forecasts, the potential for a price bounce from the $94,000 region remains intact, but for a definitive turnaround, Bitcoin needs to demonstrate sustained strength above key price levels like $95,000. As the market continues to digest these developments, traders and investors will be closely monitoring Bitcoin’s price action for any signs of a recovery or further downside movement.
This analysis provides a snapshot of Bitcoin’s current market conditions, though caution is advised as volatility remains high. Keep in mind that the cryptocurrency market is notoriously unpredictable, and price movements can change quickly.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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