As the year draws to a close, the Bitcoin market finds itself at a pivotal moment. Investors hoped that the period of stability would end on a positive note in 2024 after a series of significant swings. However, several major technical indicators are contradicting these expectations and pointing to a possible significant correction. Among these signals, the formation of a bearish pattern on the weekly charts and the erosion of critical support levels are of serious concern. At the same time, macroeconomic conditions, marked by a decline in the global money supply and a tightening of US central bank policy, are increasing pressure on risky assets. These combined elements support the most pessimistic projections. Thus, some observers are even suggesting that the price of Bitcoin could drop by $20,000. An in-depth analysis of these dynamics reveals the challenges but also the opportunities of the market in search of new certainties.
Warning signs: increased technical pressure
Bitcoin enters the last week of the year with an alarming signal on its weekly charts. What really catches the attention of observers is the emergence of a bearish reversal pattern, known as a “bearish engulfment”. This indicator presented by Rekt Capital marks the end of an uptrend that lasted for five consecutive weeks. According to the analyst, “Bitcoin is showing increasing signs of moving into a multi-week correction.” This observation, shared in a post on social network X (formerly Twitter) on December 23, 2024, quickly fueled speculation of a long period of decline.
At the same time, underlying support levels continue to weaken, raising fears of a possible significant downside. Some analysts see a return to the old highs around $74,000 as a real possibility. In a same-day post on X, trader Josh Rager points out that “corrections of 30% are common, even in bull markets.” He illustrates this point by mentioning a potential pullback to $75,000, which he sees as a typical correction in such conditions.
The situation is exacerbated by macroeconomic factors, including a significant decline in the global money supply. According to The Kobeissi Letter in the December 21 publication on X, this drop could slow the market, but also cause an even more pronounced correction. The platform provides additional insight into the $4.1 trillion decline in global money supply over the past two months, reaching the lowest level since August 2024. This difficult economic context adds to the tension, which increases market volatility.
Opportunities in volatility: what prospects for investors?
Despite the uncertain market climate, some observers see this phase as a strategic opportunity for long-term investors. According to CryptoQuant, Bitcoin is currently in an area that is considered favorable for the adoption of incremental buying strategies such as Dollar-Cost Averaging (DCA). This method consists of investing regular amounts regardless of price in order to mitigate the effects of volatility. “DCA helps reduce risk to take advantage of volatile market conditions,” explains CryptoQuant. The tool draws on recent transaction analysis to identify optimal accumulation zones, offering a reassuring perspective for investors with a long-term vision.
In the short term, however, uncertainty remains palpable. The holiday season, often marked by low liquidity in the markets, could exacerbate Bitcoin’s price swings. Mark Cullen, in an analysis published on the social network According to him, crossing any of these thresholds could cause significant price movements, thus increasing market volatility. This situation reflects the difficulties of an ecosystem seeking stability, although positive factors such as increasing interest in Bitcoin ETFs continue to support institutional momentum.
Bitcoin then goes through a key period where accumulation opportunities for informed investors coexist with risks of increased volatility. This context highlights the importance of a rigorous investment strategy adapted to increased market uncertainty.
In short, the current signals, while critical, do not necessarily mean the end of Bitcoin’s bull cycle. Corrections, frequent in the asset’s history, have often offered strategic opportunities to investors ready to accumulate in difficult conditions. This phase could thus set the stage for a sustainable recovery, provided the market overcomes current economic and technical pressures. In this context, adopting a prudent approach, supported by rigorous analysis and a long-term vision, will remain crucial during this period of uncertainty.
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A graduate of Sciences Po Toulouse and holder of the blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. Every day I try to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations and put into perspective the economic and social problems of this ongoing revolution.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.