Introduction
The Bitcoin (BTC) price correction has continued on December 19th, resulting in the largest daily chart drawdown in Q4 and the steepest decline since August 5th. Despite briefly reclaiming a position above $100,000, the formation of a clear bearish engulfing pattern has raised further correction possibilities.
The Bearish Reaction
Bitcoin’s bearish reaction stemmed from the cautiousness displayed by Jerome Powell, as the Fed chair suggested that the Federal Reserve will only cut 50 basis points throughout 2025. This lowered previous expectations from 4 rate cuts to 2 rate cuts, sparking speculation of sharper drawdowns for risk assets such as crypto.
Contrarian View on Bitcoin’s Drawdown
Glassnode suggests otherwise based on BTC’s evolving nature in this cycle. According to the onchain analytics platform, since BTC’s first bull run in 2012, the severity of a drawdown period in a bull cycle has reduced as the market cap has increased.
Bitcoin Bull Market Drawdown Periods
| Year | Depest Drawdown |
| — | — |
| 2024 | 32% |
| 2021 | 63% |
| 2017 | 36% |
| 2013 | 71% |
| 2011 | 49% |
Glassnode states, "This may be a reflection of the significant demand opened up by the spot ETFs, as well as a growing interest from institutional investors." Fundamentally, Bitcoin should avoid any steeper corrections based on its evolving correction period.
Support and Resistance Levels
Since reaching its all-time high of $108,366 on December 17th, BTC dropped to $98,744. Rafael Schultze-Kraft, the Glassnode founder, identified this price range between $99,000 and $97,000 as the strongest support zone based on Bitcoin’s cost-basis distribution.
Bitcoin Support and Resistance Based on Holders’ Cohort
| Price Point | Holding Period |
| — | — |
| $97.9K | 1 week to 1 month |
Similarly, Axel Adler Jr., a Bitcoin researcher, pointed out a similar price point, which accounts for significant importance. The researcher said, "The nearest significant support level is at $97.9K, held by the cohort holding coins from one week to one month."
Technical Perspective
From a technical perspective, Bitcoin’s bullish market structure is still intact in both the mid-term and long-term charts. Combining the onchain-derived support level with market analysis, a common was identified between $97,500 and $95,500.
Bitcoin 1-day Chart
| Price | Level |
| — | — |
| $97,500 | Support |
| $95,500 | Resistance |
A fair value gap (FVG) was identified in this price bracket alongside the potential retest of the 50-day EMA level for the first time since October 12. Furthermore, $95,000 is also key base-level support for trend continuation.
Conclusion
Considering a daily candle close takes the price below $95,000, the possibility of Bitcoin dropping to $90,000 increases significantly, where key liquidity zones are established. However, the immediate attention of most traders would be on Bitcoin’s reaction between $100,000 and $95,000.
Disclaimer
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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