Despite recent rounds of selling, Bitcoin (BTC) has identified $94K as a critical support level and was being traded at $98K just before the release of crucial US inflation data (CPI).
This week’s significant updates on macroeconomic factors, such as inflation and labor market indicators, have the potential to induce significant price fluctuations as market participants await signals on the Fed’s interest rate adjustments from the 18th of December. Presently, there is an expectation in the market for a 25 basis points cut in interest rates.
Concerns about Another Bitcoin Price Decline
Interestingly, BTC has managed to maintain its position within the short-term trading channel, with the $94K mark aligning closely with the lower boundary of the trading range. The question now arises: will this level hold firm or give way after the CPI data is released?
Market observations from BTC trader Skew have indicated robust buying interest in the range of $90K to $95K, implying a potential stabilization of BTC around these levels, with $97K acting as a balance point. Skew’s analysis highlighted the following,
“It appears that market participants have either found or are in the process of finding a balance at these levels…There continues to be active buying interest in the vicinity of the current support levels at $95K – $90K, with passive purchases visible in these regions as well.”
Similarly, blockchain analytics firm IntoTheBlock has identified strong buying interest above $90K. The firm emphasized that,
“A significant accumulation of Bitcoin has been observed between $94,800 and $97,700, with over 1.3 million addresses participating. This price range is considered a critical zone that could potentially offer support to Bitcoin’s price.”
In simpler terms, the $94K level acts as a crucial support zone that could initiate a move towards the target of $105K.
However, it is essential to note that a breach below $94K could result in over 1 million addresses facing losses. In such a scenario, panic selling by these holders might exert downward pressure on BTC if they are not long-term investors.
Supporting this potentially bearish outlook is the persistent NVT Golden Cross indicator, which has accurately signaled previous highs and lows in Bitcoin’s price. Despite recent market corrections, this metric hints that BTC may not yet be clear of potential downside risks.
Furthermore, the MVRV ratio has surged into overbought territory recently, indicating a possible correction ahead. While this suggests that Bitcoin could still rally above $100K, a sharp downturn cannot be completely ruled out.