Bitcoin Price Enters Technical Correction, Finds Support at 50-Day Moving Average

Bitcoin’s price has experienced a technical correction, resulting in a 12% decline from its highest level this month. The cryptocurrency retreated to $94,830, as the anticipated Santa Claus rally failed to materialize. This downturn occurred in a low-volume environment, with many investors and traders still in the Christmas season mode.

According to data, Bitcoin’s volume on Sunday, December 29, was $22 billion, down from $41 billion a day earlier. In normal market conditions, Bitcoin tends to have a daily volume of over $100 billion. The recent decline in volume is attributed to the holiday season.

Impact of Federal Reserve’s Monetary Policy Meeting

The Federal Reserve’s highly hawkish monetary policy meeting earlier this month has also contributed to Bitcoin’s loss of momentum. The Fed slashed interest rates by 0.25%, while its dot plot pointed to just two cuts, falling short of the anticipated four cuts in 2025.

Strategic Bitcoin Reserve and ETF Inflows

Doubts surrounding the creation of a Strategic Bitcoin Reserve have also negatively impacted Bitcoin’s price. The odds of Donald Trump creating these reserves in the first 100 days have dropped to 29%, down from the November high of 60%. Furthermore, ETF inflows have been sluggish in recent days, with Bitcoin ETFs shedding assets in 6 of the last seven market days.

January Effect: A Potential Turning Point for Bitcoin

With the Santa Claus rally failing to materialize, Bitcoin investors are now hoping for a January effect, a theory that suggests financial assets tend to rally in the first month of the year as participants create their portfolios. However, history suggests that Bitcoin does not necessarily have strong gains in January.

Key statistics on Bitcoin’s performance per month:

  • Bitcoin was positive six times since 2023.
  • It rose by just 0.62% in this year’s January and 39% a year earlier.
  • February is usually a strong month for Bitcoin, moving in the red just two times.

Bitcoin Price at a Crucial Support Level

The daily chart shows that Bitcoin is at a crucial support level, which could point to more gains in the coming weeks. It has found support at the 50-day moving average and failed to move below the ascending trendline that connects the lowest swings since November 17. However, the formation of a rising broadening wedge pattern, a popular bearish sign, poses a risk of a potential drop to $73,777, its March high.

On the other hand, an alternative scenario is possible, where Bitcoin’s price rebounds and retests the upper side of the wedge at $110,000.

For more updates on the cryptocurrency market, visit Global Crypto News for the latest news and trends.

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