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But risk appetite was strengthened, and Bitcoin Faces Key Support recovered slightly due to the Personal Consumption Expenditures (PCE) report on December 20th, which was colder than expected, and relatively dovish remarks from Fed President Austan Goolsbee. Fundamental, technical, and on-chain indications are all pointing to a bearish continuation in the Bitcoin market next week, and the rebound has paused this week as well. Below, we will analyze these predictions.
Bitcoin Eyes $89K Retest Amid Bearish Signals
Technical indicators indicate that a retest of $89,000 is likely to occur in the next sessions, and Bitcoin’s price behavior adds to the possibility of further decline.The 50-3D exponential moving average (the red wave) is in line with the 76,390 support objective.
As of right now, Bitcoin is selling for about $93,640, down from its recent peak of $108,755. The Relative Strength Index (RSI) has produced lower highs despite Bitcoin Faces Key Support achieving higher peaks, indicating a bearish divergence, which occurs at the same time as this decrease. The pattern typically indicates that momentum is waning, which raises the odds of a decline.
This is a three-day price graph for Bitcoin/US Dollar. TradingView According to the three-day Bitcoin/USD chart’s Fibonacci retracement levels, a crucial support zone at $89,000 is located at the 0.236 level. Possible places for a price rebound if the $89,000 support fails are $76,930 (0.382 Fibonacci level) and $67,100 (0.5 Fibonacci level.
Bitcoin Corection Likely Amid M2 Money Supply Decline
Crypto traders may be more hesitant to take risks in the next weeks due to the strong lag between Bitcoin and the global money supply, M2. The Kobeissi Letter, a trading resource, reveals in the figure below that Bitcoin prices usually lag behind changes in the global M2 money supply by about ten weeks. There seems to be a correlation between the two events, as Bitcoin hit a record high of $108,000 in October and the M2 money supply reached a record high of $108.5 trillion.
This article discusses the impact of Bitcoin on the global M2 supply. Written by KobeissiOn the other hand, global M2 has dropped $4.1 trillion, reaching $104.4 trillion—the lowest level since August 2024—since then. Data indicates that Bitcoin’s value could drop by as much as $20,000 in the next weeks, suggesting that the cryptocurrency could be ready for a major price correction if this pattern continues.
Bitcoin Tests Key Support from Short Term Holders
The realized price of short-term holders (STH) serves as a major support level, and the present price action of Bitcoin is moving close to this level, indicating potential zones of strong buying interest. In times of market weakness, these levels—which are determined by averaging the purchase prices of short-term investors—are frequently accurate reflections of investor pessimism.
The 1-week to 1-month STH realized price, which is just above the current trading price at $98,705, is the first important level. This level might serve as short-term resistance if Bitcoin makes a comeback, but it won’t hold much if the price drops.
The support and resistance levels of Bitcoin Faces Key Support TechnologyThe $77,792 range of one to three months’ STH realized price provides a more substantial support zone. The 3–6-month STH realized price of $60,501, however, provides the most support. In the case of extended negative momentum or unforeseen market shocks, this level could serve as the most robust safety net, reflecting the massive accumulation by investors early in the year.
FAQs
What are the key support levels to watch?
- $89,000 – A crucial support aligned with the 0.236 Fibonacci level.
- $76,930 – The next support at the 0.382 Fibonacci retracement.
- $67,100 – Deeper support at the 0.5 Fibonacci level
How does M2 money supply affect Bitcoin?
Bitcoin prices often lag behind changes in the global M2 money supply by about 10 weeks. As M2 drops, liquidity decreases, typically leading to lower Bitcoin prices.
What is the role of short-term holders (STH) in Bitcoin’s price action?
STH realized prices serve as important support zones. The 1-week to 1-month STH price at $98,705 could act as short-term resistance, while the 1–3 month range at $77,792 offers stronger support.
Is Bitcoin likely to rebound soon?
A rebound is possible if Bitcoin maintains support around $89,000. However, failure to hold key levels could accelerate declines toward deeper support zones.
