Bitcoin At Risk : Are Bearish Signals Predicting a Drop ?

As the year comes to a close, the bitcoin market finds itself at a decisive stage. Investors had hoped 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 figure on the weekly charts and the erosion of critical support levels raise serious concerns. At the same time, macroeconomic conditions, marked by a decline in global money supply and a tightening of policies by the U.S. Federal Reserve, increase the pressure on risk assets. These combined elements fuel the most pessimistic projections. Thus, some observers even mention that the price of bitcoin could drop by 20,000 dollars. A thorough analysis of these dynamics reveals the challenges, but also the opportunities, of a market in search of new certainties.

Warning signals : increased technical pressure

The bitcoin starts the last week of the year with an alarming signal on its weekly charts. Indeed, the formation of a bearish reversal figure, known as “Bearish Engulfing”, draws the attention of observers. This indicator, highlighted by Rekt Capital, marks the end of an upward trend that had lasted five consecutive weeks. According to the analyst, “the bitcoin shows increasing signs of a transition to a multi-week correction.” This observation, shared in a post on the social network X (formerly Twitter) on December 23, 2024, quickly fueled speculations about an extended period of decline.

Meanwhile, essential support levels continue to weaken, raising concerns about a possible significant drop. Some analysts consider a return to previous highs around 74,000 dollars as a realistic possibility. Trader Josh Rager, in a post on the same day on X, points out that “30% corrections are common, even within bull markets.” He illustrates this point by mentioning a potential pullback to 75,000 dollars, which he sees as a typical correction under such conditions.

The situation is exacerbated by macroeconomic factors, notably a notable contraction in global money supply. According to The Kobeissi Letter in a post on December 21 on X, this decrease could slow down the market but also provoke an even more marked correction. The platform reports further on a decline of 4.1 trillion dollars in global money supply over the past two months, reaching its lowest level since August 2024. This difficult economic context adds to the tensions, increasing market volatility.

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 in a zone deemed favorable for adopting gradual buying strategies, such as “Dollar-Cost Averaging” (DCA). This method involves investing regular amounts, regardless of the price, to mitigate the effects of volatility. “DCA helps reduce risks in view of benefiting from volatile market conditions,” explains CryptoQuant. This tool relies on recent transactional analyses to identify optimal accumulation zones, thus offering a reassuring perspective for investors with a long-term vision.

However, in the short term, uncertainty remains palpable. The year-end holidays, often marked by low liquidity in the markets, could exacerbate fluctuations in the price of bitcoin. Mark Cullen, in an analysis published on the social network X, specifies the presence of two critical liquidity zones, located at 115,000 dollars and below 80,000 dollars, respectively. According to him, crossing either of these thresholds could provoke significant price movements, further increasing market volatility. This situation reflects the difficulties of an ecosystem in search of stability, even as positive factors, such as the growing interest in Bitcoin ETFs, continue to support institutional dynamics.

Bitcoin is thus undergoing a pivotal period where opportunities for accumulation for savvy investors coexist with the risks of increased volatility. This context underscores the importance of a rigorous investment strategy, tailored to the heightened uncertainties of the market.

In summary, the current signals, although critical, do not necessarily mean the end of the bullish cycle of bitcoin. The corrections, frequent in the history of this asset, have often provided strategic opportunities for investors willing to accumulate under difficult conditions. This phase could thus lay the groundwork for sustainable recovery, provided the market overcomes the current economic and technical pressures. In this context, adopting a cautious approach, supported by rigorous analysis and a long-term vision, will remain crucial during this period of uncertainties.