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After breaking the golden $100k mark and hitting an ATH of $104K, BTC looks to have entered its price correction phase. This phase has pushed it back to $98k. The consolidation and bearish momentum lately in the market has traders looking for key support levels to determine when to reenter the market.
Several on-chain and technical analysis point to the possibility of a short term correction phase before the next big move.
Bitcoin’s MVRV ratio which is a metric for gauging market tops and corrections, is nearing historically high levels. As noted by analytics platform IntoTheBlock, elevated MVRV ratios in 2018, 2021, 2022 and 2024 have consistently preceded price pullbacks. If history repeats itself this time as well, then traders need to prepare for potential corrections.
Bitcoin’s dominance has also declined from 53.7% to 51% in the last one week marking the beginning of an altcoin season. Glassnode’s NVT ratio, which determines if an asset is overvalued, has also soared even higher indicating another round of correction.
Analyzing the BTC net deposits in exchanges, CryptoQuant data showed that the selling pressure has intensified. The Adjusted Spent Output Profit Ratio (aSORP) is now red which means that more investors are cashing out at profits, which is a well-known bulls’ top indicator.
Adding to the bearish sentiment, Bitcoin miners offloaded 85,503 BTC in the past 48 hours, pushing miner reserves to their lowest levels in months.
Bitcoin remains in a long-term uptrend, trading above the 200-day moving average. However the Moving Average Convergence Divergence indicator shows bearish momentum. This suggests that the current correction could deepen before the trend resumes.
BTC’s first major support lies at around $96k, a descending trendline support level. If this support fails to hold, the price might drop further to $91k. These levels represent potential buy zones for traders seeking to rejoin the trend.
On the other hand a rebound could push Bitcoin back above $100k, with the next potential target at $110k.
In the macro environment, the coming U.S. CPI and PPI reports give direction to BTC trends. Investors have priced in an 85% expectation for 0.25% rate cut following the Fed’s meeting of December 18th.
A beat on the CPI may offer near-term upward price action for Bitcoin, but the probabilities of Stagflation, or high unemployment and higher inflation, might keep the bulls at bay.
Unemployment data released earlier this month paints a mixed picture. Median unemployment duration in the U.S. has risen to 10.5 weeks, its highest in three years, adding to the uncertainty surrounding the Fed’s policy decisions.
Given the current correction phase, traders are advised to wait for confirmation of a bottom at key support levels around $95.8k or $91k. For long-term investors, the ongoing consolidation provides an opportunity to accumulate gradually, as Bitcoin remains in a macro uptrend.
In the short term, expect “choppy” price action with heightened volatility. Patience and a clear entry strategy will be critical to capitalizing on Bitcoin’s next big move. As BTC navigates this correction, staying informed on technical and macroeconomic developments will be key to maximizing returns.
