Bitcoin Price Analysis: BTC Risks Facing Extended Retracement If it Loses This Level

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As a seasoned researcher with over a decade of experience in financial markets and cryptocurrencies, I have witnessed countless bull runs and corrections. The latest surge in Bitcoin to $108K is no exception; it’s an exciting time for the crypto community. However, as always, caution is advised when dealing with such volatile assets.

Bitcoin has surged to a new all-time high, briefly exceeding the $108K threshold in an impulsive rally.

In an unexpected turn of events, another interest rate reduction by the Federal Reserve and some cautious remarks led to a rejection, raising the probability of a prolonged pullback.

Technical Analysis

By Shayan

The Daily Chart

As an analyst, I’ve observed that Bitcoin has reached a record high of approximately $108,000 after a robust surge, successfully breaching the substantial barrier at $100,000 with impressive velocity. However, the bullish surge seems to have subsided, and the price action is showing signs of horizontal movement. A recent unanticipated Federal Reserve rate reduction incited a market upheaval, causing a significant retreat from the $108,000 peak.

Based on the combination of this rejection and a bearish divergence shown by the RSI (Relative Strength Index) indicator, there’s a strong possibility that we’ll see a period of correction or pullback. The midline of the rising trend line, approximately at $100K, might play a crucial role as a support point for buyers to jump back in and perhaps push the asset back towards the $108K resistance area.

The 4-Hour Chart

As an analyst, I’ve noticed on the 4-hour Bitcoin chart that we’re seeing indications of waning bullish momentum and heightened volatility as we approach the $108K resistance level. This suggests a shift towards sideways consolidation, which could be a sign of profit-taking and distribution among market participants.

At present, Bitcoin is moving inside a rising wedge formation, which typically signals a temporary downturn. It’s possible that we might see a minor correction or a phase of redistribution around $108K in the coming days. Despite this, the overall upward trend continues, so it’s advisable for traders to stay vigilant and resist the urge to jump in due to fear of missing out (FOMO).

If a deeper correction unfolds, the asset could find support within the 0.5–0.618 Fibonacci retracement levels, providing a foundation for the next potential leg up in Bitcoin’s ongoing rally.

On-chain Analysis

By Shayan

Long-term holders represent a critical segment of market participants, and monitoring their behavior can provide valuable insights into future market trends. The Binary Coin Days Destroyed metric is a key tool for analyzing their activity. This metric assigns a value of 1 when the Supply-Adjusted Coin Days Destroyed (CDD) exceeds its average and 0 otherwise.

The accompanying chart illustrates the 30-day SMA of the Binary CDD metric alongside Bitcoin’s price. Spikes in this metric often signal potential selling pressure from long-term holders, as historically, significant price declines have followed such surges.

Currently, the Binary CDD metric has seen a substantial spike, coinciding with Bitcoin’s recent achievement of a new all-time high at $108K. This surge suggests that long-term holders may view this price level as an opportune moment to distribute their assets, thereby reducing their market exposure. If this selling pressure intensifies, it could contribute to further volatility and a potential price correction.

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2024-12-19 17:32