Bitcoin (BTC) Price Plunges $7,500 in Two Days: Volatility Reigns

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The recent drop in the value of Bitcoin (BTC) is quite significant and continues to deepen. A fall of approximately $7,500 from Tuesday has left investors feeling uncertain. Is this simply an instance of usual market volatility, or could we be seeing a prolonged decline in the price of Bitcoin?

Volatility plays havoc with traders

Investing in Bitcoin often brings a great deal of unpredictability to an individual’s financial journey. Many find themselves on a tumultuous emotional ride as Bitcoin enthusiasts (bulls) climb steadily, while Bitcoin skeptics (bears) seem to be leaping out in haste.

There are several reasons behind the recent decrease in Bitcoin’s value. These include increasing treasury yields, worries about inflation, and a general shift in investors’ attitudes towards pessimism.

Couldn’t it simply be that Bitcoin hit oversold territory, with its correction accelerated due to increased volatility from forced liquidations and possibly a significant amount of market manipulation?

Large Bitcoin ETF investors, along with many significant buyers, must acquire their Bitcoin, and if a large number of margin traders are forced to sell (liquidated), it could lower the price to more affordable levels. This situation benefits these big players, who may be in a prime position to capitalize on market manipulation first.

A standard Bitcoin retracement so far

On the 4-hour Bitcoin chart, the current price drop appears to follow a common pattern. The 0.618 Fibonacci level around $51,000 looks like a potential bottom, and if the fall continues, the 0.786 Fibonacci level at approximately $93,700 could serve as a support for a price rebound.

As a crypto investor, I find myself observing a significant convergence point at around $84,000. This level is not just any ordinary support, but it aligns with the 1.618 Fibonacci ratio and the ascending 100-day moving average. Given this alignment, if the market follows its current trend, this could potentially be the final line of defense before a potential retest of the peak from the last bull run at $69,000.

Given these circumstances, it’s plausible that Bitcoin might experience a drop from its current price of approximately $95,000. This is because the current price range finds its middle at this level, suggesting a potential shift could occur.

$93,600 is the base for the next leg higher

Looking at a two-week perspective, we notice a strong horizontal support around $93,600. If we zoom back into the short-term chart, it aligns with the 0.786 Fibonacci level. Could it be possible that the market structure will further develop above this support level, potentially serving as the foundation for the next phase of the bull market?

Towards the base of the graph lies the crucial Stochastic RSI. On a longer timescale like two weeks, when the indicator lines slope downwards, it’s generally unfavorable. For the bull market to persist, these lines should reverse and move upwards instead. In the 2017 bull market, the midpoint at 50.00 functioned as a support level. This time, it needs to perform similarly or we might expect a more significant correction.

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2025-01-08 14:15