Is Bitcoin at Its Cycle Low? BTC’s Current Price Trend Contrasts with December’s $108K High.

Bitcoin (BTC) has recently displayed price action that contrasts sharply with the exhaustion of its uptrend seen in mid-December when it hit record highs above $108,000, raising questions among traders: Is Bitcoin’s price weakness over, or is more downside still to come?

Current price trends suggest that a bottom may be in, as Monday’s price action demonstrated a swift recovery from the day’s lows, in contrast to the mid-December period when the uptrend faltered and reversed at the $108,000 level.

On Monday, Bitcoin initially dipped after major investment banks revised their expectations for future Federal Reserve rate cuts. Following a strong U.S. jobs report on Friday, some analysts speculated that rate hikes might even be on the horizon, which led to a drop in Bitcoin’s price below the $90,000-$93,000 support zone, in line with broader declines in U.S. stock indices.

However, this breakdown proved short-lived, as Bitcoin quickly surged back to $94,000, forming a “long-legged Doji” candlestick pattern. This pattern, characterized by a long wick, indicates that while sellers initially drove prices lower, the buyers ultimately took control, signaling potential exhaustion of the downtrend. This is often viewed as a potential sign of a market bottom, particularly when it forms at key support levels or following a significant price decline.

The appearance of the long-legged Doji at the support zone, which has held firm since late November, suggests that this price level is being actively defended by buyers. In contrast, on December 16, Bitcoin printed a Doji with a longer upper shadow at the $108,000 highs, signaling the uptrend was losing steam and that sellers were regaining control.

What’s next for Bitcoin?

Although Monday’s price action hints at a potential bottom, confirmation is still needed. A decisive break above the $95,900 high from Monday would signal that bullish momentum is gaining strength, likely prompting traders to place new buy orders. Meanwhile, the $89,000 low from Monday has become a critical level, with bears needing to break it in order to take control.

The demand-supply dynamics for Bitcoin remain bullish. As Andre Dragosch, Head of Research for Europe at Bitwise, noted, corporate demand for BTC has already outpaced the supply of newly mined coins this year, further supporting the bullish outlook.

The release of Wednesday’s U.S. Consumer Price Index (CPI) report may increase market volatility, potentially influencing expectations for future Fed rate cuts and providing further direction for Bitcoin’s price movement.

“After Monday’s sharp decline, Bitcoin rebounded from a low of $89K, as traders await the U.S. CPI report on January 15. Several major altcoins followed Bitcoin’s move, with many experiencing larger losses in the past 24 hours,” said Neal Wen, Head of Global Business Development at Kronos Research. “Investors are looking for stability in the market to gauge whether Bitcoin will face further downside or begin a new upward movement,” Wen added.