As we approach the end of 2024, Bitcoin’s price correction continues to be a topic of discussion among crypto enthusiasts. On December 19, the crypto asset experienced its largest daily chart drawdown in Q4 and the steepest decline since August 5. Despite briefly reclaiming a position above $100,000, the formation of a clear bearish engulfing pattern has raised further correction possibilities.
Bitcoin’s Bearish Reaction: A Cautionary Note from Jerome Powell
The bearish reaction of Bitcoin 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 development lowered previous expectations from 4 rate cuts to 2 rate cuts, sparking speculation of sharper drawdowns for risk assets such as crypto.
But What Does Glassnode Say?
Glassnode, an onchain analytics platform, suggests otherwise based on BTC’s evolving nature in this cycle. According to their analysis, 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.
| Year | Depest Drawdown |
| — | — |
| 2021 | 63% |
| 2017 | 36% |
| 2013 | 71% |
| 2011 | 49% |
| 2024 | 32% |
Glassnode attributes this reduced severity to the significant demand opened up by spot ETFs and growing interest from institutional investors. Fundamentally, Bitcoin should avoid any steeper corrections based on its evolving correction period.
Bitcoin’s Support Zone: A Key Area of Interest
Since reaching its all-time high of $108,366 on December 17, 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.
Cost Basis Distribution: A Tool for Investors
The cost basis distribution helps investors evaluate where the total supply was acquired and distributed the most across different price points. This information can be a valuable tool in understanding market dynamics and making informed investment decisions.
| Price Range | Holdings |
| — | — |
| $99,000 – $97,000 | 24% of Total Supply |
A Similar View from Axel Adler Jr.
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."
A Common Ground: A Price Range Between $97,500 and $95,500
Combining the onchain-derived support level with market analysis, a common ground was identified between $97,500 and $95,500. This price range is also supported by the potential retest of the 50-day EMA level for the first time since October 12.
A Fair Value Gap (FVG) and Key Liquidity Zones
A fair value gap (FVG) was identified in this price bracket alongside the potential retest of the 50-day EMA level. Furthermore, $95,000 is also key base-level support for trend continuation.
| Price Range | FVG |
| — | — |
| $97,500 – $95,500 | Yes |
The Possibility of a Drop to $90,000
Considering a daily candle close takes the price below $95,000, the possibility of Bitcoin dropping to $90,000 increases significantly. However, this is not a certainty and traders should continue to monitor market developments.
Conclusion
This article has provided an in-depth analysis of Bitcoin’s price correction and its impact on the crypto market. While there are indications of further correction possibilities, Glassnode suggests that BTC’s evolving nature in this cycle may reduce the severity of drawdowns. As always, investors should conduct their own research and consult with a financial advisor before making any investment decisions.
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