What to know:
- BTC carved out a shooting star candle in December, hinting at renewed bearishness.
- December’s low is the level to defend for the bulls.
- The pattern is consistent with macro developments that suggest short-term pain for risk assets.
As a researcher with over two decades of experience in financial markets, I have seen my fair share of bull and bear cycles. The shooting star candlestick pattern that Bitcoin (BTC) has formed in December is a red flag that I cannot ignore. It’s not just the technical analysis that worries me but also the broader macroeconomic landscape that suggests challenging times for risk assets.
The Fed’s recent hawkish signals, coupled with rising Treasury yields and a strengthening dollar index, are reminiscent of the prelude to a storm. However, I am not one to panic just yet. As a seasoned observer, I have learned that market cycles often swing back and forth like a pendulum before settling down.
My prediction for 2025 is that it will be a rollercoaster ride, but in the end, BTC will reach new heights. The road may be bumpy, but as they say, what doesn’t kill you makes you stronger.
On a lighter note, I always like to remind myself and others that investing in cryptocurrencies is a bit like riding a rollercoaster – it’s thrilling, exciting, and sometimes terrifying, but in the end, it’s all worth it when you reach the peak! So buckle up and enjoy the ride!
As an analyst, I find myself reflecting on the impressive beginning Bitcoin (BTC) has had this year, surpassing the six-figure mark in 2024. Looking ahead to 2025, most experts I’ve consulted anticipate a repeat of last year’s success, with predictions placing BTC at around $185,000 and possibly even higher.
Although the road might still appear to follow an optimistic trajectory, recent market movements indicate that sellers could regain control, potentially leading to a significant price decrease in the near future.
In December, Bitcoin’s price soared to an all-time high exceeding $108,000, yet it closed the month at a lower level, under $94,000, marking its first monthly decrease since August, in terms of its value.
On the monthly chart, a bearish reversal pattern known as the “shooting star” candlestick was created by the two-day price movement.
This candle shape exhibits a tall upper ‘tail’ or wick, symbolizing a significant difference between the day’s high and opening price for the specified timeframe. The small ‘body’ signifies a minor difference between the opening and closing prices. In an ideal scenario, the upper wick should be at least twice the size of the body, while the lower wick could be very small. For Bitcoin (BTC), the upper wick is nearly four times larger than the body, with a minimal lower wick.
In simpler terms, the shooting star pattern in the chart indicates that at first, buyers caused prices to rise, but then sellers took over close to the peak, causing the price to fall back down below where it started. This suggests a possible return of pessimism among traders.
According to the CMT Association’s Level III textbook, they suggest that the bears (sellers) might have the upper hand when it comes to the shooting star pattern, explaining the psychological factors influencing this chart pattern.
A notable increase in the value of the shooting star, which climbed from around $70,000 to over $100,000, suggests a possible upcoming downturn. This bearish trend could be validated if the price falls below the December low of $91,186. In such a case, it’s crucial for bulls to protect this level.
Note that similar candles with longer upper wicks have marked previous bull market tops.
Short-term pain
The warning sign of the most recent meteor, in simpler terms, aligns with the overall economic outlook, suggesting that investments carrying risk may face difficult conditions. This trend is largely influenced by the more aggressive stance taken by the Federal Reserve, as well as increasing Treasury bond yields and a growing dollar index.
Confidence is high among analysts that the Federal Reserve might reconsider its latest stance indicating fewer interest rate reductions in 2025, which could lead to a positive trend for Bitcoin and overall risky assets.
According to trader and analyst Alex Kruger, my forecast for 2025 is straightforward: it’s going up. Since November 5th, there hasn’t been any major shift in the underlying factors. February is expected to be a standout month, as the recent hawkish stance of the Federal Reserve might temporarily restrain broader markets in the short term. (X refers to the specific context or platform where the statement was made)
According to Kruger, the Federal Reserve is expected to adopt a less aggressive monetary policy stance during the first quarter, possibly indicating further interest rate reductions.
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2025-01-03 10:19