Bitcoin Faces Potential Bearish Reversal Amid December Price Action
Bitcoin (BTC) Overview
Bitcoin started 2024 by reaching six figures, with projections for 2025 estimating a price of $185,000 or higher. However, recent price movements indicate potential selling pressure, suggesting a possible decline.
In December, Bitcoin peaked above $108,000 but closed the month below $94,000, marking its first monthly loss since August. This two-way price action formed a bearish reversal candlestick pattern known as the "shooting star."
The shooting star features a long upper wick and a small body, indicating significant upward movement followed by a drop below the opening price. In this instance, the upper wick is nearly four times larger than the body, signifying increased seller control at high prices.
The CMT Association's Level III textbook notes that this pattern suggests potential bearish sentiment in the market.
This shooting star follows an uptrend from $70,000 to over $100,000, warning of a potential bearish reversal if prices fall below the December low of $91,186, which bulls need to defend.
Similar candlestick patterns with longer upper wicks have previously indicated bull market tops.
Short-term Market Conditions
The appearance of the shooting star aligns with broader macroeconomic challenges for risk assets, influenced by hawkish signals from the Fed, rising Treasury yields, and a strengthening dollar index.
Analysts believe the Fed may reverse its stance on fewer rate cuts for 2025, supporting a bullish outlook for BTC and risk assets overall.
Trader and analyst Alex Kruger predicts an upward trajectory for 2025, emphasizing that no fundamental changes have occurred since November 5. He anticipates February will be particularly strong, despite current market constraints due to Fed policies, predicting a dovish shift in Q1.