Bitcoin's (BTC) post-Fed price drop to $96,000 has activated a critical divergence signal that has historically signaled the end of a price pullback.
On Wednesday, the Fed cut the benchmark borrowing cost as expected but only penciled in two rate cuts for 2025, down from four expected in September. The central bank confirmed that it is not interested in participating in a possible government plan to build a strategic BTC reserve.
Since then, BTC has fallen over 8%, hitting lows near $96,000 at one point. At the time of writing, the cryptocurrency changed hands at nearly $97,500, down nearly 10% from the high of $108,266 reached earlier in the week, CoinDesk data show.
The losses have caused the 50-hour simple moving average (SMA) to dip below the 200-hour SMA, confirming a bearish trend. The pattern suggests that the ongoing pullback could evolve into a deeper one, although it failed to live up to its reputation during the recent bull run.
Bitcoin has experienced a few pullbacks during its post-US election rally from $70,000 to over $100,000, and each of these declines has ended with a bearish crossover of the 50-SMAs. and 200-hour.
The latest crossover, therefore, gives hope to bulls who expect a fresh move to six figures above $100,000.
A possible bounce could be against close to $10,600, a level identified by the descending trend, representing the recent price decline. A break there would open doors for higher levels.
It is important to remember that patterns do not always play out as expected, and the other indicator discussed above may fail, which could lead to a deeper drop. The first sign of trouble is if prices move below the overnight low of $96,000, which could reveal the low of around $91,000 recorded on December 5th.
Source: https://www.coindesk.com/markets/2024/12/20/as-bitcoins-post-fed-price-dip-extends-this-key-contrary-indicator-offers-fresh-hope-godbole
