The pressing question on the minds of crypto traders is: Has the Bitcoin (BTC) price decline come to an end, or will there be more declines?
The former appears to be the case, as Monday's price action was characterized by a rapid recovery from intraday lows, in contrast to mid-December, when the rally stalled and the stock turned lower from an all-time high above $108,000. .
BTC initially fell on Monday as investment banks backed off expectations for a Fed rate cut, with prices moving above the key support zone of 90,000-93,000 as some discussed a possible rate hike following Friday's impressive jobs report. fell below the dollar floor. US stock indexes fell by a gap.
However, the support collapse did not last long and by the end of the day, BTC soared to $94,000, leaving a classic “long-legged doji candle”.
A long wick indicates the exhaustion of a downtrend, indicating that sellers initially drove the price down, but buyers eventually overwhelmed the price. This pattern is often seen as a potential signal of a bottom, when it occurs primarily at major support levels, or after a significant price decline, as is the case with BTC.
Ashinaga Doji has appeared in the support zone (horizontal line) that has consistently limited the downside since late November.
The inverse of the above is what we saw on December 16th when the bulls failed to sustain the price to record highs above $108,000 and printed a Doge candle with a longer top shadow. This was a sign that the uptrend was losing momentum and sellers were becoming more assertive.
What's next?
Monday's price action suggests a possible bottom, but confirmation is needed in the form of a definitive move above the day's high of $95,900.
Chart-driven directional traders typically wait and then place new buy orders into the market. On the other hand, Monday's low near $89,000 is a level for bears to break.
Note that BTC demand and supply dynamics remain bullish. As Andre Dragosch, head of European research at Bitwise, pointed out in X, corporate demand for BTC has already exceeded the supply of new coins this year.
Price volatility may accelerate again following Wednesday's US CPI report, which could impact expectations for Fed rate cuts.
“After Monday’s plunge, Bitcoin rebounded from a low of $89,000 as traders awaited the January 15 U.S. Consumer Price Index (CPI) report. Major altcoins followed suit. , many have further increased their losses in the past 24 hours,” said Neil Wen, head of global business. It was developed by Kronos Research, he told CoinDesk.
“Market watchers are now keeping an eye on signs of stabilization to see if there is further downside or upside,” Wen added.
