Despite recent downtrends in trading, Bitcoin [BTC] has identified $94,000 as a critical support level and was priced at $98,000 just before the release of important US inflation data (CPI).
This week’s significant macro updates, including inflation and labor market reports, could result in volatile price fluctuations as investors anticipate the Federal Reserve’s actions on interest rates starting December 18th. Presently, the market appears to be factoring in a 25 basis points cut in interest rates.
Possibility of Another BTC Price Decline?
Remarkably, BTC has managed to maintain its short-term trend channel, with $94,000 serving as a crucial level alongside the recent market lows. The question now is whether this support will hold or buckle following the CPI report.
According to BTC analyst Skew, there has been a notable demand zone between $90,000 and $95,000, indicating a stabilization of BTC around these levels, with $97,000 acting as an equilibrium point. In his analysis, he mentioned,
“I believe that the market has reached a state of balance here… Market participants continue to actively respond around the current lows of $95,000 to $90,000, with passive buying seen in these ranges.”
Additionally, the blockchain analytics company IntoTheBlock has recognized strong buying interest above $90,000. The company highlighted that,
“A significant demand area is visible between $94,800 and $97,700, where more than 1.3 million wallet addresses hold Bitcoin. This region stands out as a critical zone for potential support levels.”
In simpler terms, $94,000 represents a pivotal zone for buying interest and a potential springboard for a potential surge towards the $105,000 target.
Nevertheless, a drop below $94,000 could signal trouble for over a million wallet addresses, potentially leading to panic selling and dragging down Bitcoin prices for those who are not long-term holders.
Furthermore, the persistent NVT Golden Cross indicator has lent credence to this bearish outlook. This metric has accurately predicted previous market peaks and troughs, signaling a potential peak in BTC prices towards the end of November (represented by green bars) and hinting at ongoing uncertainty despite recent market dips.
Thus, it appears that Bitcoin might not be completely clear of risks yet, particularly as indicated by the NVT Golden Cross metric.
Moreover, the MVRV ratio has steadily climbed towards overbought levels, suggesting a probable correction in prices. While BTC could still experience a surge past the $100,000 mark, a sharp reversal cannot be discounted.