Emily Walker
Recent fluctuations in Bitcoin’s price have led to considerable upheaval and liquidations throughout the cryptocurrency market. In the last 24 hours, Bitcoin has experienced a drop of approximately 5%, falling below the $100,000 mark once more. Currently, it appears to be stabilizing around $96,000, though it is down roughly 10% over the past three days.
A technical analyst on TradingView attributes this decline to a larger trend affecting investment markets and suggests that there could be a potential price floor within this current drop.
Bitcoin Prices Retreating Between Fibonacci Support Levels
Currently, Bitcoin’s price behavior mirrors patterns seen in the Fibonacci retracement levels, which traders use to identify potential support and resistance points. Analysis indicates that Bitcoin is now positioned within a retracement zone on the 4-hour chart, specifically between the 0.618 and 0.786 Fibonacci levels following its recent peak of $108,135 achieved just three days ago.
This historical range often serves as a solid support area for Bitcoin, which tends to rebound from these levels. The analyst notes that Bitcoin frequently rebounds around the 0.786 level, hinting at a possible temporary bottom close to this zone, just under the $95,000 mark.
As previously mentioned, Bitcoin has found support at $96,000, yet Fibonacci retracements suggest there could be further declines ahead. The analyst predicts a drop to around $93,800 as a likely overshoot. Any further decline could pave the way for a more significant downturn.
Links to Stock Market Declines
The recent downturn in Bitcoin is heavily influenced by a sell-off in major U.S. stock indices. While the cryptocurrency sector traditionally operates independently of conventional finance, the introduction of Spot Bitcoin ETFs has forged a closer tie between the two. Consequently, Bitcoin has become increasingly reactive to shifts and sentiments within traditional markets.
The analyst points out that S&P 500 Futures, Nasdaq Futures, and Dow Jones Futures have all seen notable declines from their 1.618 Fibonacci reverse extension levels on the weekly chart. This relationship is further highlighted by data revealing considerable withdrawals from U.S.-based Spot Bitcoin ETFs. As per SosoValue data, these ETFs faced $680 million in outflows on December 19, breaking a streak of 15 consecutive days of inflows.
As of this writing, Bitcoin is priced at $97,950, slightly above the crucial $96,000 support level. However, if the bearish trend in stock indices persists, Bitcoin’s price might continue to follow suit and could potentially dip to $93,800 before gaining upward momentum again.