As the year draws to a close, the bitcoin market finds itself at a decisive juncture. Investors were hoping for a period of stability to end 2024 on a positive note after a series of significant fluctuations. However, several major technical indicators contradict these expectations and point towards a possible significant correction. Among these signals, the formation of a bearish pattern on the weekly charts and the erosion of critical support levels trigger serious concerns. At the same time, macroeconomic conditions, marked by the decline in the global money supply and a tightening of policies by the American Federal Reserve, are increasing pressure on risky assets. These combined elements fuel the most pessimistic projections. Thus, some observers even suggest that the price of bitcoin could fall by $20,000. An in-depth analysis of these dynamics reveals the challenges, but also the opportunities, of a market in search of new certainties.
Warning signs: increased technical pressure
Bitcoin begins the last week of the year with an alarmist signal on its weekly charts. Indeed, the formation of a bearish reversal pattern, known as “Bearish Engulfing”, attracts the attention of observers. This indicator, put forward by Rekt Capital, marks the end of an upward trend which had lasted five consecutive weeks. According to the analyst, “bitcoin is showing increasing signs of a transition to a multi-weekly correction.” This observation, shared in a post on the social network X (formerly Twitter) on December 23, 2024, quickly fueled speculation about a prolonged period of decline.
At the same time, essential support levels continue to weaken, heightening concerns of a possible significant fall. Some analysts see a return to old highs around $74,000 as a realistic possibility. Trader Josh Rager, in a publication of the same day on X, underlines that “corrections of 30% are common, even in bull markets.” He illustrates this point through the mention of a potential pullback to $75,000, which he considers a typical correction in such conditions.
The situation is aggravated by macroeconomic factors, including a notable contraction in the global money supply. According to The Kobeissi Letter in a publication on December 21 on X, this decrease could slow down the market, but also cause an even more marked correction. The platform informed more on a decline of 4.1 trillion dollars in the global money supply over the last two months, which reached its lowest level since August 2024. This difficult economic context adds to the tensions, which reinforces volatility of the market.
Opportunities in volatility: what prospects for investors?
Despite an uncertain market climate, some observers see this phase as a strategic opportunity for long-term investors. According to CryptoQuant, bitcoin is currently located in an area considered favorable for the adoption of incremental purchasing strategies, such as Dollar-Cost Averaging (DCA). This method consists of investing regular amounts, regardless of the price, in order to mitigate the effects of volatility. “DCA helps reduce risk to take advantage of volatile market conditions,” explain CryptoQuant. This tool draws on recent transactional analyzes to identify optimal accumulation zones, which therefore offers a reassuring perspective for investors with a long-term vision.
However, in the short term, uncertainty remains palpable. The end-of-year holidays, often marked by low liquidity on the markets, could exacerbate fluctuations in the price of bitcoin. Mark Cullen, in an analysis published on the social network precise the presence of two critical liquidity zones, located respectively at $115,000 and below $80,000. According to him, crossing either of these thresholds could cause significant price movements, which would thus increase market volatility. This situation reflects the difficulties of an ecosystem seeking stability, although positive factors, such as growing interest in Bitcoin ETFs, continue to support institutional dynamics.
Bitcoin is then going through a pivotal period where accumulation opportunities for informed investors coexist with the risks of increased volatility. This context highlights the importance of a rigorous investment strategy, adapted to increased market uncertainties.
In short, the current signals, although critical, do not necessarily mean the end of bitcoin's bull cycle. Corrections, frequent in the history of this asset, have often offered strategic opportunities to investors ready to accumulate in difficult conditions. This phase could thus pave the way for a sustainable recovery, provided that the market overcomes current economic and technical pressures. In this context, the adoption of a cautious approach, supported by rigorous analysis and a long-term vision, will remain decisive in this period of uncertainty.
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