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Is Bitcoin’s bottom in after December’s high Above $108K ?

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The uptrend exhaustion seen at record highs around $108K in mid-December appears to be in stark contrast to the most recent price movement of Bitcoin.

What to know

The most important concern on the minds of cryptocurrency traders is whether the price weakness of bitcoin (BTC) has ended or if more is to come.

In contrast to mid-December, when the rally halted and turned lower from record highs above $108,000, Monday’s price action, which was marked by a quick recovery from intraday lows, seems to support the former.

When major U.S. stock indices gapped lower on Monday, prices of Bitcoin first fell below the lower end of the key support zone of $90,000 to $93,000. This was because investment banks lowered their expectations for Fed rate cuts, with some even talking about the possibility of rate hikes after Friday’s excellent jobs report.

However, the support’s breakdown was brief, and by day’s end, Bitcoin had risen back to $94,000, leaving behind a traditional “long-legged Doji candle.”

Although sellers originally pushed prices lower, purchasers eventually overtook them, as seen by the lengthy wick, which represents downtrend exhaustion. When this pattern appears at significant support levels or following a significant price decline, as it has for Bitcoin, it is frequently seen as a possible bottom indication.

The horizontal lines, or support zone, that has continuously held back the decline since late November is where the long-legged doji has surfaced.

On December 16, the bulls failed to maintain prices at record highs above $108,000, resulting in a doji candle with a longer upper shadow. This was the opposite of what we observed earlier. That indicated that sellers were trying to re-establish themselves while the rally was losing speed.

What comes next?

Although Monday’s price behavior suggests a possible bottom, a clear move above the day’s high of $95,900 is necessary for confirmation.

Usually, chart-driven directional traders hold off on placing new buy orders until after that. The bears now need to beat Monday’s low, which was close to $89,000.

Keep in mind that the dynamics of supply and demand for Bitcoin remain optimistic. Andre Dragosch, Head of Research-Europe at Bitwise, said on X that this year’s business demand for Bitcoin has already surpassed the supply of new coins.

The U.S. CPI report on Wednesday may cause price volatility to increase once more, which could affect expectations of a Fed rate cut.

“As traders anticipate the U.S. CPI report on January 15, Bitcoin recovered from a low of $89K following Monday’s steep decline. Neal Wen, head of global business development at Kronos Research, told CoinDesk that major cryptocurrencies followed suit, with many suffering worse losses over the past day.

FAQ

The quick bounce from Bitcoin’s low of $89K on Monday suggests that the downside may be limited, and the market might be nearing a bottom. However, a clear move above $95,900 is needed to confirm that the downward trend has reversed.

Bitcoin’s price drop was influenced by broader market conditions, such as U.S. stock indices gapping lower and lowered expectations for Fed rate cuts, following an excellent jobs report. This triggered a temporary breakdown below the $90,000–$93,000 support zone.

A “long-legged Doji” candle is a candlestick pattern that indicates indecision in the market. For Bitcoin, its appearance after the price drop from $89K suggests exhaustion of the downtrend and the possibility of a reversal, signaling potential support at this level.

The U.S. Consumer Price Index (CPI) report, expected on January 15, may introduce price volatility for Bitcoin as traders adjust their expectations regarding the Federal Reserve’s interest rate policy, potentially influencing market sentiment for cryptocurrencies.

Positive supply and demand dynamics for Bitcoin remain intact. Demand from business sectors has already exceeded the supply of new coins this year, suggesting that Bitcoin’s fundamentals remain strong, even if short-term price volatility occurs.

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