Bitcoin’s (BTC) daily chart has produced three consecutive red candles for the first time since the first week of November, which coincidentally was the lead-up period to Donald Trump’s US election victory.
Another similarity between the last time three or more red candles were observed on the daily chart was that Bitcoin retested the 50-day EMA level.
With BTC’s price dropping by more than 15% since its all-time high, one analyst said that most of the drawdown is potentially over for the largest cryptocurrency.
Bitcoin correction is “almost done,” says analyst
With Bitcoin price falling under $93,000 on Dec. 20, Captain Faibik, an independent crypto trader, said that BTC’s correction was approaching a conclusion.
In an X post, the trader highlighted that BTC’s current decline is due to a massive bearish divergence between its price and relative strength index (RSI) over the past month. Such divergences are usually followed by an 8% to10% fall, which is considered a “healthy reset.”
The trader expected the price to bounce from the $94,000 range, as illustrated in the chart.
On the contrary, Cold Blooded Shiller, an anonymous crypto trader, expected a deeper pullback for Bitcoin based on the same divergence pattern. Comparing BTC’s current price action to January 2024, the trader said that if a similar outcome unfolds, BTC’s sell-off may stretch down to as low as $85,000.
Meanwhile, Byzantine General, a futures market analyst, highlighted incessant selling by spot holders. The analyst said,
“We actually got a perp premium at the moment because spot is selling off so much it’s disconnecting from the derivatives market.”
In fact, Maartunn, a CryptoQuant analyst, said that this is the most significant Coinbase selling activity since Bitcoin was priced at $66,000. The selling pressure is “relentless,” as the Coinbase premium fell to a quarterly low.
Related: Bitcoin whale support includes mid-$60K zone in new BTC price warning
Bitcoin realized losses reached $28.9 million
With increasing selling pressure by the hour, the volume of realized losses also peaked above its weekly average. Axel Adler Jr, a Bitcoin onchain analyst, highlighted that the BTC realized losses over the past 5 days reached $28.9 million, 320% above its weekly average in 2024. The 28 million mark has been crossed only 10 times this year.
Analyzing Bitcoin’s mid-term chart revealed a bearish break of structure (BOS). However, there is a clear invalidation for a reversal if Bitcoin continues to close a daily candle above $95,000.
As observed in the chart, the 4-hour candle has established an immediate recovery above $95,000 after dropping to $92,777. For Bitcoin to nullify the bearish sentiment, a daily candle above $95,000 would be ideal.
Related: Bitcoin dips to $92K in ‘optimal dip-buying’ move as PCE boosts crypto
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
