Bitcoin’s Largest Daily Chart Drawdown in Q4
On December 19, Bitcoin’s price correction continued, resulting in the largest daily chart drawdown for BTC in Q4 and the steepest decline since August 5. While the crypto asset briefly reclaimed a position above $100,000, the formation of a clear bearish engulfing pattern has raised further correction possibilities.
Bitcoin 1-day Chart
Source: Cointelegraph/TradingView
The Bearish Reaction and the Fed’s Announcement
The 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.
Impact on Risk Assets
While this development has sparked speculation of sharper drawdowns for risk assets such as crypto, Glassnode suggests otherwise based on BTC’s evolving nature in this cycle.
Glassnode’s Analysis: Reduced Severity of Drawdown Period
Since Bitcoin’s first bull run in 2012, the severity of a drawdown period in a bull cycle has reduced as the market cap has increased. In 2024, Bitcoin’s deepest drawdown was 32%. For context:
- 2021: 63%
- 2017: 36%
- 2013: 71%
- 2011: 49%
Bitcoin Bull Market Drawdown Periods
Source: Glassnode
According to Glassnode, "This may be a reflection of the significant demand opened up by the spot ETFs, as well as a growing interest from institutional investors." Thus, fundamentally, Bitcoin should avoid any steeper corrections based on its evolving correction period.
Related Article: BTC Reclaims $100K but Weekly Chart Forming ‘Bearish Engulfing’ Candlestick
Bitcoin tests significant support at $99K and $97K. Since reaching its all-time high of $108,366 on Dec. 17, BTC dropped to $98,744.
Rafael Schultze-Kraft’s Analysis
Source: Glassnode
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. The cost basis distribution helps investors evaluate where the total supply was acquired and distributed the most across different price points.
Bitcoin Support and Resistance Based on Holders’ Cohort
Source: X.com
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
Bitcoin’s bullish market structure is still intact in both the mid-term and long-term charts.
Combining Onchain-Derived Support Level with Market Analysis
A common was identified between $97,500 and $95,500. 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 Oct. 12.
Key Base-Level Support for Trend Continuation
$95,000 is also key base-level support for trend continuation. 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.
Related Article: Bitcoin Trader Sees ‘Larger’ BTC Price Dip Next Month as $100K Holds
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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