Bitcoin ($BTC) Price Drop: Analyzing the Plunge and Predicting Further Declines

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As a seasoned crypto investor with over a decade of experience under my belt, I’ve seen more market swings than I can count. The current plunge in Bitcoin‘s price, while disheartening, doesn’t surprise me one bit.

The price of Bitcoin ($BTC) is persistently dropping at an accelerated pace. Dropping by 8% over both Wednesday and Thursday, it’s continuing to decrease on Friday, currently hovering around $95,000. How low might this slide continue?

Powell successfully talks the market down

As an analyst, I never anticipated that a mere 25 basis point reduction in the Federal Reserve’s interest rate would cause such turmoil across various market sectors. When Federal Reserve Chairman Jerome Powell took the stage following the FOMC meeting on Wednesday and began to temper expectations by suggesting there might only be two interest rate changes throughout 2025, the markets started to plummet.

It’s likely that what Powell did was perfectly predictable, given the challenging situation the Fed found itself in. If he had made any additional promises for lower interest rates, it might have caused the market to surge, potentially leading to an increase in inflation as well.

Additionally, it’s worth noting that a significant number of Federal Reserve members are forecasting interest rate increases according to the Fed’s dot plot system. It seems that these projections, which haven’t always been accurate in the past, aren’t influencing the current market outlook.

Spot Bitcoin ETFs see big outflow

As an analyst, I’ve noticed a significant downward trend in Bitcoin investments recently, as evidenced by the heavy selling of U.S. Spot Bitcoin ETFs on Thursday, resulting in a substantial 6,710 BTC outflow. This marks the end of a streak of 15 consecutive trading days with net inflows for these ETFs.

Measured move to $89,400

On the graph displayed, we observe that Bitcoin (BTC) has clearly breached the rising trendline channel. Such patterns tend to break towards lower prices, which isn’t unexpected. The current price stands at approximately $95,000, marking a significant dip to the 0.786 Fibonacci level. If the downward trend persists, the projected target for this channel’s descent is around $89,400, as indicated on the chart.

If this situation unfolds, it means that Bitcoin (BTC) might reach a new lower minimum point. Such a move usually indicates the conclusion of the ongoing upward trend, potentially leading to a significant correction that could push its price down to $73,000 or even lower.

Nosedive back to $73,000 is a possibility

The daily graph indicates a possible steep decrease in the value of Bitcoin ($BTC), should it continue beyond the anticipated move outside the ascending channel. If the trend persists without a halt, the price could plummet as low as $73,000. At this point, there are significant market structures in place that may prevent the price from falling even lower.

Towards the base of the graph, you’ll find the Stochastic RSI, a tool that highlights momentum shifts. Notice how the lines of this indicator are nearing their lowest points. This pattern is consistent across all short-term indicators lying beneath the daily one as well. Given this, it seems likely that we might soon witness another upturn in the trend.

It’s uncertain if the upcoming increase will extend the upward trend or signal a downward trend for Bitcoin. Currently, it’s at a crucial juncture in its price movement.

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2024-12-20 14:10