After the ‘sell the news’ episode following the approval of Spot Bitcoin ETFs, Bitcoin experienced a notable decline. However, analysts are now speculating whether Bitcoin ($BTC) is poised for a more substantial correction. The question remains: has Bitcoin reached its peak, with an anticipated reversal that could fulfill the expected 30 to 40% correction over the coming weeks and months?
The possibility of Bitcoin retracing to confirm its base price structure is a scenario that aligns with historical bull market cycles. Previous patterns suggest that Bitcoin tends to revisit and confirm its base before resuming an upward trajectory. In this context, a reasonable drawback prediction could be around $30,000, while another possibility hovers around $34,000, considering the price being supported by the 0.618 Fibonacci level.
Despite these considerations, Bitcoin is currently holding above a trendline established since the end of August 2023, although it only surpassed this trendline in October. The present price also aligns with robust support dating back to early 2021. A decisive break below this support could have significant implications.
Looking at another aspect, the longer-term weekly stochastic RSI for Bitcoin is rapidly descending, indicating potential downside momentum. However, if Bitcoin manages to resist this downward pressure, the stochastic RSI could reset. Once the indicator hits bottom, it may transition to indicating positive price momentum as it starts to rise again.
The weekly timeframe for the stochastic RSI typically takes around six months to cycle from the bottom to the top and back to the bottom. Having hit bottom at the end of August 2023, the current trajectory suggests a potential bottoming out in early February, approximately two weeks away. At this crucial juncture, the indicator could either bounce upward swiftly or linger at the bottom for a brief period, typically not exceeding three or four weeks.
In light of these developments, the Bitcoin market is at a critical juncture. The price is currently threatening to break below the robust support levels mentioned earlier. Traders should approach the market cautiously, emphasizing careful risk management given the uncertain conditions.
