Bitcoin (BTC) experienced its first significant downturn since Donald Trump’s 2024 election victory, plummeting over 8.50% despite reaching a record high of $108,230 earlier in the same week. This decline underscores the cryptocurrency market’s vulnerability to macroeconomic factors and technical indicators.
The drop followed the Federal Reserve’s hawkish stance on interest rates for 2025, announced on December 18. The Fed cut rates by 25 basis points (bps), setting a new range of 4.25-4.50%, and hinted at just 50 bps of rate reductions in 2025. This forecast was a notable shift from its September projection of 100 bps in cuts.
On December 20, a cooler-than-expected Personal Consumption Expenditures (PCE) report and dovish commentary from Federal Reserve President Austan Goolsbee briefly boosted risk appetite, helping Bitcoin recover some losses. However, the recovery momentum has faded, and various indicators suggest that further bearish moves could lie ahead for BTC.
Bitcoin Technical Analysis: Potential Retest of $89,000
Bitcoin’s technical landscape indicates a high likelihood of another price dip, with key levels pointing toward a retest of $89,000 in the near term.
Currently trading around $93,640, Bitcoin’s pullback from its recent peak of $108,755 has coincided with a bearish divergence on the Relative Strength Index (RSI). This pattern, characterized by lower highs on the RSI despite higher price peaks, signals waning momentum and increases the probability of downward price action.
Fibonacci retracement analysis on the BTC/USD three-day chart identifies $89,000 as a critical support level at the 0.236 retracement mark. Should this level fail, additional support zones emerge at $76,930 (0.382 Fibonacci level) and $67,100 (0.5 Fibonacci level). The $76,930 level aligns closely with the 50-period exponential moving average (EMA) on the three-day chart, strengthening its significance.
